Abstract

We study the firms’ choice of whether or not to consider pieces of information concerning their interdependence. In particular, any firm can strategically choose to consider or not the fact that industry output is affected by its own production choice. If this piece of information is considered, the firm behaves as an aligopolist; if not, firm behaves in a monopolistically competitive way. Thus, the market regime is endogenously determined. We show that different outcomes can emerge, depending on the number of firms, the degree of product substitutability and the cost structure.