Why Isn ’ t the Accident Information Shared ? A Coopetition Perspective
نویسنده
چکیده
The purpose of this article is to investigate both cooperative and competitive strategies of firms that may cause accidents. In order to reduce accident probabilities and the amount of damage, each firm tries to improve the safety level of its products and these firms may exchange information about the previous accidents associated with their products. Thus, these firms may cooperate on this point. On the other hand, they compete on quantities, quality, prices, and so forth, after deciding whether accident information is to be disclosed. This situation is termed “coopetition.” In order to address the issue of disclosure of accident information, we develop an economic model with two firms facing the following three-stage game. In the first stage, both firms decide whether to disclose their accident information to their rival. In the second stage, they choose an effort level to reduce their after sales costs. In the third stage, they choose their quantities. There are three main conclusions. First, there is a unique equilibrium where both firms choose to not disclose their accident information. Second, the outcome in equilibrium becomes Pareto inferior to the outcome from both firms choosing to disclose their accident information when the condition relating to marginal effort costs * Mahito Okura is an associate professor in the Faculty of Economics, Nagasaki University, Nagasaki Japan (email: [email protected]). The author appreciates helpful comments by Corentin Curchod and participants at Hitotsubashi Insurance Workshop and European Academy of Management 2007 Annual Meeting. Any remaining flaws are, of course, my own.
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