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Information Acquisition in Vertical Relations

Discussion Papers 1543, 18 S.

Pio Baake, Andreas Harasser, Friederike Heiny


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Forthcoming in: The B.E. Journal of Economic Analysis and Policy (2017)


We analyze a simple supply chain with one supplier, one retailer and uncertainty about market demand. Focusing on the incentives of the supplier and the retailer to enhance their private information about the actual market conditions, we show that choices on information acquisition are strategic complements. While the retailer's incentives are mainly driven by the information rent that he can earn, the supplier will choose to acquire information only if the retailer is rather well informed, even though the information is free of charge.

Pio Baake

Research Director Regulation in the Firms and Markets Department

JEL-Classification: D82;D83;D86
Keywords: Asymmetric information, information acquisition, vertical relations
Frei zugängliche Version: (econstor)