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.
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number
90-10.
Length: 20 pages Date of creation: May 1990 Date of revision: Handle: RePEc:kud:kuiedp:9010
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