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Asymmetric Information and Price Stickiness in Imperfectly Competitive Markets

Author

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  • Torben M. Andersen

    (Institute of Economics, University of Aarhus)

  • Morten Hviid

    (Institute of Economics, University of Copenhagen)

Abstract

In a duopoly model with sequential price setting we show that as a result of private information prices are either sticky in the sense that they are not adjusted to available information on market conditions, or prices are adjusted but become upward biased. Hence asymmetric information causes suboptimal prices in imperfectly competitive markets.

Suggested Citation

  • Torben M. Andersen & Morten Hviid, 1990. "Asymmetric Information and Price Stickiness in Imperfectly Competitive Markets," Discussion Papers 90-10, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:9010
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    Cited by:

    1. Kovenock, Dan & Widdows, Kealoha, 1998. "Price leadership and asymmetric price rigidity," European Journal of Political Economy, Elsevier, vol. 14(1), pages 167-187, February.

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