Industrial Espionage with a Noisy Intelligence
نویسندگان
چکیده
We analyze industrial espionage in a model of two firms: a monopoly incumbent, M, and a potential entrant, E, who owns a noisy intelligence system (IS) of a certain precisionα . The IS generates a signal on M’s action and E decides whether or not to enter based on this signal. We show that ifα is commonly known, M is the one who benefits from a perfect IS and E who spies on M prefers a less accurate IS. If howeverα is a private information of E, the opposite result is obtained. E is best off with a perfect IS and M with a less accurate one. JEL Classification: C72; D82; L10; L12
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