SIMULTANEOUS PRICE CHANGES, INFORMATION ACQUISITION ON COMMON COMPETITORS AND WELFARE *

We investigate a model where two firms choose whether to acquire information on a common competitor. We find that strategic complementarity on information acquisition exists, yielding multiple equilibria. In addition, we investigate welfare implication of information acquisition. We find that information acquisition reduces both consumer surplus and the total profits of the firms. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd/University of Adelaide and Flinders University.