Market Information and Firm Performance

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.

[1]  Pradeep K. Chintagunta,et al.  Investigating Dynamic Multifirm Market Interactions in Price and Advertising , 1999 .

[2]  David Besanko,et al.  Logit Demand Estimation Under Competitive Pricing Behavior: An Equilibrium Framework , 1998 .

[3]  M. Sarvary,et al.  Marketing Information: A Competitive Analysis , 1997 .

[4]  Jagmohan S. Raju,et al.  Quota-Based Compensation Plans for Multiterritory Heterogeneous Salesforces , 1996 .

[5]  Vrinda Kadiyali.  Entry, its Deterrence, and its Accommodation: A Study of the U.S. Photographic Film Industry , 1996 .

[6]  Dominique M. Hanssens,et al.  Competitive pricing by a price leader , 1994 .

[7]  Paul Milgrom,et al.  Comparing Optima: Do Simplifying Assumptions Affect Conclusions? , 1994, Journal of Political Economy.

[8]  Vineet Padmanabhan,et al.  Warranty Policy and Extended Service Contracts: Theory and an Application to Automobiles , 1993 .

[9]  Laurence Prusak,et al.  Managing Information Strategically , 1993 .

[10]  K. Sridhar Moorthy,et al.  Chapter 4 Competitive marketing strategies: Game-theoretic models , 1993, Marketing.

[11]  J. Laffont,et al.  Econometric Analysisof Collusive Behaviorin a Soft‐Drink Market , 1992 .

[12]  F. Peter,et al.  THE INFORMATION EXECUTIVES TRULY NEED , 1992 .

[13]  Rashi Glazer.  Marketing in an Information-Intensive Environment: Strategic Implications of Knowledge as an Asset , 1991 .

[14]  David C. Schmittlein,et al.  How Many Forecasters Do You Really Have? Mahalanobis Provides the Intuition for the Surprising Clemen and Winkler Result , 1991, Oper. Res..

[15]  Amiya K. Basu,et al.  On the relative performance of linear versus nonlinear compensation plans , 1990 .

[16]  George S. Day,et al.  Market Driven Strategy: Processes for Creating Value , 1990 .

[17]  Robert C. Blattberg,et al.  Database Models And Managerial Intuition: 50% Model + 50% Manager , 1990 .

[18]  K. Moorthy.  Strategic Decentralization in Channels , 1988 .

[19]  Dominique M. Hanssens,et al.  Modeling Asymmetric Competition , 1988 .

[20]  R. Lal.  Technical Note---Delegating Pricing Responsibility to the Salesforce , 1986 .

[21]  Amiya K. Basu,et al.  Salesforce Compensation Plans: An Agency Theoretic Perspective , 1985 .

[22]  E. Gal‐Or,et al.  First Mover and Second Mover Advantages , 1985 .

[23]  E. Gal‐Or,et al.  Information Sharing in Oligopoly , 1985 .

[24]  X. Vives.  Duopoly information equilibrium: Cournot and bertrand , 1984 .

[25]  Richard N. Clarke.  Collusion and the Incentives for Information Sharing , 1983 .

[26]  Ronald W. Hilton.  The Determinants of Information Value: Synthesizing Some General Results , 1981 .

[27]  T. Başar.  Decentralized multicriteria optimization of linear stochastic systems , 1978 .

[28]  J. E. Russo,et al.  The Value of Unit Price Information , 1977 .

[29]  Y. Ho,et al.  Informational properties of the Nash solutions of two stochastic nonzero-sum games , 1974 .

[30]  Richard M. Cyert,et al.  An Analysis of Cooperation and Learning in a Duopoly Context , 1973 .

[31]  F. Scherer,et al.  Industrial Market Structure and Economic Performance. , 1971 .

[32]  M. Degroot,et al.  Bayesian Analysis and Duopoly Theory , 1970, Journal of Political Economy.

[33]  Charles E. Swanson,et al.  Marketing Research and Analysis , 1970 .