Competitive Disadvantage and Discretionary Disclosure in Industries

We explore how competitive disadvantage affects firms’ incentives to disclose or withhold information of common interest to competing firms within a Cournot duopoly. We establish the existence of a unique disclosure equilibrium to the problem of firms disclosing private information about aggregate demand, and show that firms choose to withhold information of either very high or very low demand. We also show that both the size of the disclosure interval and ex ante probability of disclosure decreases as the intensity of competition between firms increases.