The Effects of Disclosure Regulation of an Innovative Firm

Jos Jansen

No 1459, CESifo Working Paper Series from CESifo

Abstract: A firm actively manages its rival’s beliefs by disclosing and concealing information on the size of its process innovation. The firm’s disclosure strategy results from the trade-off between two effects on product market incentives. First, the firm’s competitor learns that the firm is efficient, which discourages the competitor. Second, the competitor becomes more efficient himself, since he can expropriate part of the disclosed knowledge, which encourages him. I characterize the equilibrium disclosure strategies for any knowledge spillover in a simple Cournot duopoly model, and illustrate the results graphically. Moreover, I compare the strategic disclosure equilibria with equilibria under non-strategic disclosure.

Keywords: process innovation; Cournot competition; strategic substitutes; information disclosure; knowledge spillovers (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-ino, nep-mic and nep-reg
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Citations: View citations in EconPapers (2)

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