Producing to Signal: Private Information in Dynamic Quantity Competition
We model a finite-horizon game of repeated oligopoly competition in which sellers choose quantities of a homogeneous product with linear demand and have private information about their own marginal costs, which are serially correlated over time. Focusing on fully separating equilibria, we provide conditions for existence and uniqueness. Relative to static complete- and incomplete-information benchmarks, sellers' incentives to signal low costs can substantially affect output, productive efficiency, and welfare, even when there are ten or more sellers. We apply the model to the global oil market, and compare predictions to a model where sellers can make quantity commitments.
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Copy CitationAndrew Sweeting, Xuezhen Tao, and Qian Wang, "Producing to Signal: Private Information in Dynamic Quantity Competition," NBER Working Paper 35883 (2026), https://doi.org/10.3386/w35883.Download Citation
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