Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers
We model differentiated product pricing by firms that possess private information about serially-correlated state variables, such as their marginal costs, and can use prices to signal information to rivals. In a dynamic game, we show that signaling can raise prices significantly above static complete information Nash levels, even when the privately observed state variables are restricted to lie in narrow ranges. We calibrate our model using data from the beer industry, and show that our model can explain changes in price levels, price dynamics and cost pass-through after the 2008 MillerCoors joint venture.
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Copy CitationAndrew Sweeting, Xuezhen Tao, and Xinlu Yao, "Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers," NBER Working Paper 28589 (2021), https://doi.org/10.3386/w28589.Download Citation
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Published Versions
Andrew Sweeting & Xuezhen Tao & Xinlu Yao, 2024. "Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers," American Economic Journal: Microeconomics, vol 16(3), pages 345-373.
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