Privacy-preserving Information Sharing in Oligopoly Competitions

2026-06-01

AI Summary

This study addresses strategic information sharing in a Cournot oligopoly under demand uncertainty, where firms are reluctant to disclose private signals due to fears of competitive disadvantage. Integrating game-theoretic analysis with differential privacy principles, the authors design a noisy aggregation mechanism augmented by an exogenous public signal to balance incentives for information sharing against privacy concerns. The analysis reveals that privacy protection alone is insufficient to induce truthful disclosure; a sufficiently informative public signal is essential. Firms possessing high-precision private signals demand stronger privacy guarantees. In a duopoly without public signals, information sharing never occurs, whereas in markets with three or more firms, effective sharing can be achieved through a combination of access control and public signals, highlighting the complementarity between privacy-preserving mechanisms and the informational environment.

Abstract

Information sharing among competing suppliers can improve decision-making under uncertainty, yet strategic concerns regarding rival exploitation often deter voluntary disclosure. We study information-sharing mechanisms in a Cournot oligopoly with uncertain demand, where a platform aggregates suppliers' signals through privacy-preserving channels and may also possess an exogenous external signal. The central challenge is to balance strategic safety with informational utility: privacy noise reduces the exposure of individual signals, but also lowers the value of the shared information pool. We first characterize a baseline setting in which access to aggregated information is contingent on participation. In a two-firm market without an external signal, firms refuse to share regardless of the privacy level. In an \(n\)-firm market, sharing may arise even without privacy safeguards because non-participating firms lose access to the aggregated signal. Building on this baseline, we show that privacy protection alone is insufficient to incentivize disclosure; it must be combined with a sufficiently informative external signal. We further show that firms with more accurate private signals require stronger privacy protection. Overall, our results characterize the sharing-feasible region and highlight the complementarity between privacy design and the external information environment.

Problem

• privacy-preserving
• information sharing
• oligopoly
• strategic disclosure
• Cournot competition

Innovation

• privacy-preserving information sharing
• Cournot oligopoly
• strategic disclosure
• external signal
• information aggregation