Market information and firm performance

Market information and firm performance

0.00 Avg rating0 Votes
Article ID: iaor20012140
Country: United States
Volume: 46
Issue: 8
Start Page Number: 1075
End Page Number: 1084
Publication Date: Aug 2000
Journal: Management Science
Authors: ,
Keywords: decision, performance, game theory
Abstract:

The value of new information depends on how accurate the information is, but it may also depend on the characteristics of the firm and the nature of the industry it operates in. We develop a game-theoretic model to understand how firm and industry characteristics moderate the effect of market information on firm profits. Our results suggest that information is more valuable when product substitutability is higher, suggesting that information is of greater value in more competitive industries. Our results also suggest that although industry size does not affect the value of information, information is more valuable for larger firms. We find that, except under some conditions, more precise market information has a greater impact on profits in a Stackelberg mode of conduct than in a Bertrand–Nash mode.

Reviews

Required fields are marked *. Your email address will not be published.