Data and Code for: "Dynamic Oligopoly Pricing with Asymmetric Information: Implications for Horizontal Mergers"

Principal Investigator(s): View help for Principal Investigator(s) Andrew Sweeting, University of Maryland College Park; Xuezhen Tao, Shanghai University of Finance and Economics; Xinlu Yao, Independent Research (c/o UMD)

Version: View help for Version V1

Name	File Type	Size	Last Modified
asymmetry_example_twotype.m	text/x-matlab	58.2 KB	12/12/2023 05:29:AM
bne_focs_p_duop_asym_N_INCRMC_twotypes_asym2_mp.m	text/x-matlab	5.5 KB	12/12/2023 05:29:AM
bne_focs_p_duop_asym_N_INCRMC_twotypes_asym2_mp_lin.m	text/x-matlab	5.4 KB	12/12/2023 05:29:AM
dprofit1_trN_INCRMC_asym_mp.m	text/x-matlab	2.4 KB	12/12/2023 05:29:AM
eqm_focs_p_duop_INCRMC.m	text/x-matlab	517 bytes	12/12/2023 05:29:AM
eqm_focs_p_duop_INCRMC_MP.m	text/x-matlab	1 KB	12/12/2023 05:29:AM
find_xb.m	text/x-objcsrc	273 bytes	12/12/2023 05:29:AM
price_thread_twotypes_asym_mp.m	text/x-matlab	7.5 KB	12/12/2023 05:29:AM
rightreplace.m	text/x-matlab	50 bytes	12/12/2023 05:29:AM
script_asymmetric_3firm_example.m	text/x-objcsrc	4.3 KB	12/12/2023 05:29:AM

Project Description

Summary: We model repeated pricing by differentiated product firms when each firm has private information about its serially-correlated marginal cost. In a fully separating equilibrium of the dynamic game, signaling incentives can lead equilibrium prices to be significantly above those in a static, complete information game, even when the possible variation in the privately-observed state variables is very limited. We calibrate our model using data from the beer industry, and show that, without any change in conduct, our model can explain increases in price levels and changes in price dynamics and cost pass-through after the 2008 MillerCoors joint venture.

This archive contains MATLAB code to replicate the computational examples in the paper (i.e., the results outside of Section 3 and online Appendix C). Fake data moments are provided that will produce calibration and counterfactual results similar, but not quite identical to, the baseline specification calibration and counterfactual results in the paper. If proprietary IRI Academic Data Set is available (see citations in the README) STATA and MATLAB code is provided to generate the Section 3 and Appendix C tables and figures.

Scope of Project

Subject Terms: oligopoly; asymmetric information; signaling; mergers; dynamic games

JEL Classification:
      D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
      D82 Asymmetric and Private Information; Mechanism Design
      L13 Oligopoly and Other Imperfect Markets
      L41 Monopolization; Horizontal Anticompetitive Practices
      L66 Food; Beverages; Cosmetics; Tobacco; Wine and Spirits

Geographic Coverage: United States (data not included in deposit)

Data Type(s): program source code

Collection Notes: This is a code repository. The paper uses the IRI Academic dataset with citations and links in README. One file (linking week codes to dates) is supplied. A "fake" data set of moments is provided so that the calibration and counterfactual code can be run.

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Published Versions

V1 [2024-07-29]

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