Entry and Exchanges of Cost Information

The literature on exchanges of information has ignored …rms’ entry decisions. Yet, the Federal Trade Commission recently expressed concerns that exchanges of information in business-to-business electronic platforms would adversely impact entry and, thus, consumers. When entry decisions are endogenized in a competitive Cournot model with cost uncertainty, we …nd results that contrast sharply with current thinking on the welfare consequences of information sharing. ¤ Dept of Economics, SUNY Stony Brook NY, 11794. E-mail: [email protected]. y Simon School of Business, University of Rochester, Rochester, NY 14627; E-mail: [email protected]. We are very grateful to Greg Sha¤er and Greg Stoness for detailed, insightful comments on an earlier draft. We also thank seminar particpants at SUNY-Stony Brook and the University of Rochester for suggestions.