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 rivals. In a dynamic game, signaling raise significantly above static complete Nash levels even when the privately observed variables are restricted lie in narrow ranges. calibrate our using data from beer industry, we show explain changes price dynamics after 2008 MillerCoors joint venture. Institutional subscribers NBER working paper series, residents of developing countries may download this without additional charge at www.nber.org.