Information sharing in a Cournot–Bertrand duopoly

Abstract

Studies on information sharing in oligopolies focus on either Cournot or Bertrand markets. We consider a Cournot–Bertrand market where owners provide strategic managerial incentives and can share the details of their compensation contracts. We find that the Cournot firm punishes its manager for sales, whereas the Bertrand firm rewards sales. Both firms share contract information if the firms' products are sufficiently differentiated. However, if product differentiation is low, then either the Cournot firm or the Bertrand firm keeps the contract information private. Mandating information sharing can lead to an increase in consumer and social welfare but harms firms' profits.