Learning about common and private values in oligopoly

Bernhardt, Dan; Taub, Bart

doi:10.1111/1756-2171.12077

Cited by 20 publications

(11 citation statements)

References 34 publications

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“…When information is private, the price system uses dispersed knowledge, leading to different degrees of efficiency (Grossman and Stiglitz 1980;Vives 2014). Prices also reflect public information related to external factors affecting demand or supply conditions (Bernhardt and Taub 2015). At the business level, strategies of price discrimination and dynamic pricing are nowadays very popular to capture idiosyncratic variations in demand and to provide suppliers with complex but effective tools for revenue management optimization (Alderighi et al 2022;Bigne et al 2021;Nocke and Peitz 2007;Moller and Watanabe 2010;Gershkov and Moldovanu 2012;Moller and Watanabe 2016;Neubert 2022;Talón-Ballestero et al 2022;Vives and Jacob 2021).…”

Section: Introductionmentioning

confidence: 99%

Booking in the Rain. Testing the Impact of Public Information on Prices

2022

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Weather forecasts are a rare example of public information which is, at the same time, relevant for agents' decisions and entirely exogenous for both sides of the (tourism) market. We develop a model where signals of good weather have a positive impact on accommodation prices, the effect being stronger the higher the accuracy of the forecast and the ex-ante uncertainty in weather conditions. Using data from a sea and sun destination, we estimate an augmented hedonic price model and find that results robustly support the theory. We also find that the response of prices to weather forecasts is larger for upper-scale hotels than for low- and mid-scale hotels, a result we link to the superior pricing capability of the former.

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Section: Introductionmentioning

confidence: 99%

Booking in the Rain. Testing the Impact of Public Information on Prices

2022

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“…Thus, a SO 2 sector-speci…c emission tax could be implemented based on these monitored data, emissions inputs, or some other related measures. 8 The second contribution of this paper is to analyze welfare properties when the regulator tailors environmental prices through taxes in uncertain industries. To this end, we examine the value of information to decision makers under ex-ante calibrated emissions taxes by using 7 For instance, in a 2014 decision concerning air quality problems involving nitrogen oxides (NO x ) and sulfur dioxides (SO 2 ), the United States Supreme Court acknowledged the signi…cant and inherent uncertainties in the estimation of pollution damages and di¤erences that can arise between ex-ante expected versus realized production and abatement costs.…”

Section: Introductionmentioning

confidence: 99%

“…Clearly, under the U.S. legal system, any regulatory instrument could not ignore the relationship between sources and receptors in matters involving air quality standards (Schmalensee and Stavins, 2013). 8 Parry and Small (2005) o¤er another example. They note that some externalities associated with driving light-duty vehicles are a function of fuel consumption, e.g., CO 2 emissions, while others are a function of vehicle miles traveled such as accidents or local air pollution.…”

Section: Introductionmentioning

confidence: 99%

Environmental Taxation, Information Precision, and Information Sharing

2020

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We analyze how environmental taxes should be optimally levied when the regulators and …rms face costs uncertainties in a Stackelberg-Cournot game. We allow linearquadratic payo¤s functions coupled with an a¢ ne information structure encompassing common and private information with noisy signals. In the …rst period, the regulator chooses the intensity of emissions taxes in order to reduce externalities. In the second period, facing industry-related and …rm-speci…c shocks, …rms compete in the marketplace as Cournot rivals and choose outputs. We show that, given costs uncertainties with non-uniform quality of signals across …rms, the regulator sets di¤erentiated tax policy. We also examined the social value of information under ex-ante calibrated emissions taxes. We argue that the magnitude of the associated social bene…ts and costs of more precise private signals hinge largely and fundamentally on the value of the ratio of the slopes of the marginal damage and the marginal consumer surplus. The lack of accurate data clouds the regulatory process by preventing the necessary …ne-tuning of the tax rules towards speci…c environmental circumstances. Finally, we investigate information sharing between polluters and its impacts on welfare. We stress that, when there are threats of severe environmental damages under deep uncertainties, collusion is welfare reducing and may jeopardize the regulatory process. Numerical simulations illustrate the results that the model delivers.

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“…Another branch of theoretical literature, on the effects of demand uncertainty on firm's pricing policies in oligopolistic markets, is referred to as signal jamming (Bernhardt & Taub, ; Mirman, Samuelson, & Urbano, ; Riordan, ). These authors analysed how firms make suboptimum decisions in order to conceal the value of an unknown parameter of the market demand curve from their rivals.…”

Section: Introductionmentioning

confidence: 99%

Learning through experimentation in an oligopoly market with asymmetric information

Ropero

2019

Australian Economic Papers

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Unlike previous literature, in which firms compete in the market with the same information, this article analyses a two-period duopoly game in which only one firm is completely informed about the market conditions, whereas the other firm is unaware of one parameter of the demand curve. In this setting, we describe how the informed firm uses its price set in period 1 in order to reveal or to hide its private information and how the uninformed firm uses its own price in period 1 in order to learn the market conditions when they are not revealed by its rival. Specifically, we obtained the conditions under which the informed firm sets a higher price than its optimum in the first period to hide its private information in certain cases and to reveal that information in others. Likewise, this paper describes the conditions under which the uninformed firm sets a lower price than its optimum in period 1 in order to learn the unknown parameter. We found that the informed firm's cost of revealing its private information to its rival is lower than the uninformed firm's cost of learning the market conditions.

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Learning about common and private values in oligopoly

Cited by 20 publications

References 34 publications

Booking in the Rain. Testing the Impact of Public Information on Prices

Booking in the Rain. Testing the Impact of Public Information on Prices

Environmental Taxation, Information Precision, and Information Sharing

Learning through experimentation in an oligopoly market with asymmetric information

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