Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Information sharing, information free-riding and capital structure in oligopolies
AU - Dasgupta, Sudipto
AU - Shin, Jhinyoung
PY - 1999/1/1
Y1 - 1999/1/1
N2 - We study the effect of capital structure decisions on the incentives for firms in a duopoly to share information through a trade association. Focusing on the case of Cournot competition with demand uncertainty, we find that the standard result for all-equity firms that information will not be shared may be reversed. When one firm has better access to information than the other, leverage may be a way for the latter firm to free-ride on the former firm's information. With ex ante symmetric firms, a trade association will be formed even if information sharing does not occur.
AB - We study the effect of capital structure decisions on the incentives for firms in a duopoly to share information through a trade association. Focusing on the case of Cournot competition with demand uncertainty, we find that the standard result for all-equity firms that information will not be shared may be reversed. When one firm has better access to information than the other, leverage may be a way for the latter firm to free-ride on the former firm's information. With ex ante symmetric firms, a trade association will be formed even if information sharing does not occur.
U2 - 10.1016/S0167-7187(97)00022-2
DO - 10.1016/S0167-7187(97)00022-2
M3 - Journal article
VL - 17
SP - 109
EP - 135
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
SN - 0167-7187
IS - 1
ER -