Asymmetric Information Sharing in Oligopoly: A Natural Experiment in Retail Gasoline

Using a natural experiment from a retail gasoline antitrust case, we study how asymmetric information sharing affects oligopoly pricing. Empirically, price competition softens when, following case settlement, information sharing shifts from symmetric to asymmetric, with one firm losing access to high-frequency, granular rival price data. We provide theory and empirics illustrating how strategic ignorance creates price commitment, leading to higher price-cost margins. Using a structural model, we find substantial profit-enhancing effects of asymmetric information sharing. These results provide a cautionary tale for antitrust agencies regarding the potential unintended consequences of limiting price information sharing among firms.

Keywords: JEL Classification: D22, D43, D83, L13 Information Sharing, Strategic Ignorance, Commitment, Retail Gasoline

JEL Classification: D22, D43, D83, L13

Suggested Citation: Suggested Citation

Byrne, David P. and de Roos, Nicolas and Lewis, Matthew S. and Marx, Leslie M. and Wu, Xiaosong, Asymmetric Information Sharing in Oligopoly: A Natural Experiment in Retail Gasoline (June 18, 2024). Available at SSRN: https://ssrn.com/abstract=4513435 or http://dx.doi.org/10.2139/ssrn.4513435