Topic: Cournot Competition, Informational Feedback, and Real Efficiency

Speaker: Li Siguang, The Hong Kong University of Science and Technology (Guangzhou)

Time: November 8, 2024, 9:00

Venue: EMS 206

Abstract: We revisit the relationship between firm competition and real efficiency in a novel setting with informational feedback from financial markets. Although intensified competition can decrease market concentration in production, it reduces the value of proprietary information (e.g., market prospects) for speculators and discourages information production and price discovery in financial markets. Therefore, competition generates non-monotonic welfare effects through two competing channels: market concentration and information production. When information reflected in stock prices is sufficiently valuable for production decisions, competition can harm both consumer welfare and real efficiency. Our results are robust under cross-asset trading and learning and highlight the importance of considering the interaction between product market and financial market in antitrust policy, e.g., concerning the regulation of horizontal mergers.


Guest Bio: Li Siguang, who holds a Ph.D. in Economics from Cornell University, is currently a professor at the Hong Kong University of Science and Technology (Guangzhou). He has published more than ten papers in journals such as the Journal of Economic Theory, International Economic Review, Economic Research Journal, Finance and Stochastics, and Quantitative Finance.