Industrial Organization, Volume 9 (Advances in Applied Microeconomics)

Strategic Delegation in Cournot Oligopoly with Incomplete Information air g aej air b aej

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= otjp'(ej){ [Y(q g, gjg)gg - wg - c .ggg] - [Y(gg, gjb)9g - w g - crgg g] }(A7) = ajp (ej) { [Y(q b, gjg)q!, - w,, - cibglb} - [Y(q ,, gjb)geb - W ,, - cibq lb] }

* ir

* aTr`b

i

(A8)

a The difference between - is a 'g negative since ~' < 0 for output being aej aej agiagj strategic substitutes and then the variation in expected profit of firm i due to a change in qi when firm j is in the bad state of nature is greater than the corresponding change when firm j is in the good state of nature . Therefore, (A6) is negative and (A4) is negative as well (Q.E.D .) .