Optimal Information Acquisition for Heterogenous Duopoly Firms
Abstract This paper analyzes a stochastic duopoly market in which heterogenous firms acquire costly information about the stochastic market demand prior to their production decisions. The equilibrium amounts of information acquired by each firm are compared. The comparative statics analyses show the differential effects of a change in information cost, the degree of uncertainty in the market demand, and the demand and cost function parameters. Journal of Economic Literature Classification Numbers: D82, L13, L15.