Strategic Partial Inattention in Oligopoly

Lijun Pan

doi:10.1515/bejte-2023-0028

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Strategic Partial Inattention in Oligopoly

Lijun Pan

Published/Copyright: March 7, 2024

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From the journal The B.E. Journal of Theoretical Economics Volume 24 Issue 2

Abstract

This article examines firms’ choices on partial (in)attention prior to quantity competition. Being partially (in)attentive, a firm accounts for a part of its market impact. We find that regardless of the number of firms, there is always a unique subgame perfect Nash equilibrium where all firms choose to be partially attentive. The optimal attention level decreases in the number of firms, increases in product differentiation, and converges to zero, i.e. firms tend to be fully inattentive, as either the number of firms goes to infinity or product differentiation goes to zero.

Keywords: endogenous market structure; partial (in)attention; optimal attention level

JEL Classification: D43; L13

Corresponding author: Lijun Pan, School of Business, Nanjing University, Nanjing, China, E-mail: panlijun@nju.edu.cn

Funding source: National Social Science Fund of China

Award Identifier / Grant number: 22&ZD074

Funding source: Japan Society for the Promotion of Science

Award Identifier / Grant number: 19K13681

Funding source: National Natural Science Foundation of China

Award Identifier / Grant number: 71573141

Acknowledgments

I would like to express my gratitude to the Editor, Burkhard C. Schipper, and two anonymous referees for their constructive comments and suggestions. I am also indebted to Takatoshi Tabuchi for his in-depth discussion and generous guidance. I gratefully acknowledge the financial support from the Grant-in-aid for Research Activity, Japan Society for the Promotion of Science (19K13681), National Science Foundation of China (71573141), and National Social Science Fund of China (22&ZD074). The usual disclaimer applies.

Research funding: This work includes the financial support from the Grant-in-aid for Research Activity, National Social Science Fund of China (22&ZD074), Japan Society for the Promotion of Science (19K13681), and National Science Foundation of China (71573141).

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Received: 2023-04-04

Accepted: 2024-02-22

Published Online: 2024-03-07

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Articles in the same Issue

https://doi.org/10.1515/bejte-2023-0028

Keywords for this article

endogenous market structure; partial (in)attention; optimal attention level