Research On Cournot Equilibrium With Information Acquisition On Yield Uncertainty

In this paper, we study how the information acquisition on the yield uncertainty affects thefirms’ strategies and performance under Cournot competition. This thesis is constructed asfollows:In Chapter1, we introduce the research background related to the yield uncertainty, andprovide a literature review in the related research fields.In Chapter2, we mainly focus on the effect of information acquisition on the firms’strategies. We first study the monopoly case in which only one firms faces the yield uncertainty.Our study finds that it is optimal for the monopolist to acquire the information on yielduncertainty if the cost of information acquisition is relatively low. We then analyze the duopolycase, in which there exist two firms who face yield uncertainty and compete with each other inquantity. According to whether the firms acquire the information on the yield uncertainty, thereare three possible information structures:(II) both firms choose to acquire information,(NN)neither of them acquires the information, and (NI) only one of them acquires the information.Our study finds that the firm with information in the NI competition achieves the largestexpected profit if the cost of information acquisition is ignored. However, the cost of informationacquisition has a significant impact on the equilibrium information structure. For example, if thecost of information is relatively high, NN will be the equilibrium information structure.In Chapter3, we extend the duopoly model to the case with multiple firms. We consider twodifferent scenarios. They are the firms decide their target production to maximize their respectiveexpected profit or the social planner decides the total market output to maximize the total socialwelfare. Firms will produce more in the second case, and will not choose acquiring informationwhen the number of firms is too large even without considering the cost of informationacquisition.In Chapter4, we consider the firms face both yield uncertainty and demand uncertainty andsolve their decision problem with two signals. According to which information the firm chooses,there are three possible information structures:(II) both firms choose to acquire informationrelated to yield uncertainty,(DD) both firms choose to acquire information related to demanduncertainty, and (NI) only one of them acquires the information related to yield uncertainty andanother chooses the demand information. We can get the equilibrium solution of the threesituations and the NI station is the best strategy under certain conditions.