We consider a setting of two firms that sell substitutable products under price competition. We show that private signals enable firms to improve market forecast and earn higher profits. Provided that their private signals are not perfectly correlated, firms can benefit from sharing signals with each other. This is irrespective of product substitutability. Moreover, information sharing is a strategic complement to cooperative price setting to improve the profit performance of firms.
- Information sharing
- Nash bargaining
- Price competition
ASJC Scopus subject areas
- Management Science and Operations Research
- Industrial and Manufacturing Engineering
- Applied Mathematics