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Strategic buyers and privately observed prices

Strategic buyers and privately observed prices
Strategic buyers and privately observed prices
A model of finitely repeated price competition between two sellers with differentiated goods and a large buyer is analyzed. The set of pure strategy sequential equilibria is investigated under public and private monitoring. With private monitoring, i.e., when prices are not observable to the competing sellers, all sales are made by the better seller and the set of repeated game equilibrium payoffs coincides with the stage game subgame perfect equilibrium payoffs. This is in sharp contrast to the game with perfect monitoring where the folk theorem obtains. Journal of Economic Literature Classification Numbers: C72, D43.
repeated games, private monitoring, collusion
0022-0531
469-482
Bergemann, Dirk
436929ea-1d3f-48d5-bf4f-08ef4a2d74b4
Valimaki, Juuso
6cb468e1-96a7-4632-8db2-906714498ce2
Bergemann, Dirk
436929ea-1d3f-48d5-bf4f-08ef4a2d74b4
Valimaki, Juuso
6cb468e1-96a7-4632-8db2-906714498ce2

Bergemann, Dirk and Valimaki, Juuso (2002) Strategic buyers and privately observed prices. Journal of Economic Theory, 105 (2), 469-482. (doi:10.1006/jeth.2001.2891).

Record type: Article

Abstract

A model of finitely repeated price competition between two sellers with differentiated goods and a large buyer is analyzed. The set of pure strategy sequential equilibria is investigated under public and private monitoring. With private monitoring, i.e., when prices are not observable to the competing sellers, all sales are made by the better seller and the set of repeated game equilibrium payoffs coincides with the stage game subgame perfect equilibrium payoffs. This is in sharp contrast to the game with perfect monitoring where the folk theorem obtains. Journal of Economic Literature Classification Numbers: C72, D43.

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More information

Published date: 2002
Keywords: repeated games, private monitoring, collusion

Identifiers

Local EPrints ID: 39629
URI: http://eprints.soton.ac.uk/id/eprint/39629
ISSN: 0022-0531
PURE UUID: bb83ffd1-6997-4633-b0d2-e51722604456

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Date deposited: 29 Jun 2006
Last modified: 15 Mar 2024 08:15

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Contributors

Author: Dirk Bergemann
Author: Juuso Valimaki

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