This is the most updated version of the document.
Preview |
PDF
License: Creative Commons: Attribution-Noncommercial 3.0 (CC BY-NC 3.0) Download (397kB) | Preview |
Abstract
We model an industry in which a discrete number of firms choose the output of their differentiated products deciding whether or not to consider the impact of their decisions on aggregate output. We show that two threshold numbers of firms exist such that: below the lower one there is a unique equilibrium in which all firms consider their aggregate impact as in standard oligopoly; above the higher threshold there is a unique equilibrium in which all firms disregard that impact as in standard monopolistic competition; between the two thresholds there are two equilibria, one in which all firms consider their aggregate impact and the other in which they do not. We then show that our model of strategic inattention is isomorphic to a model of strategic delegation with managerial compensation based on relative profit performance.
Other metadata
Available versions of this document
-
To know or not to know: Endogenous market structure when information can be strategically neglected. (deposited 14 Jan 2015 15:03)
- To Know or Not To Know: Strategic Inattention and Endogenous Market Structure. (deposited 03 Mar 2015 10:21) [Currently displayed]