INFORMATION AND COST ASYMMETRY IN EXPERIMENTAL DUOPOLY MARKETS

We analyze data from experimental duopoly markets to assess the role i nformation plays in facilitating collusion. In these markets, profitab ility can be common knowledge or private information. Market outputs a re estimated in structures with symmetric and asymmetric costs under t he two information conditions. Symmetric markets are more cooperative when profitability is common knowledge; asymmetric market outputs are unaffected by information differences. However, common knowledge in as ymmetric markets increases the share of the output produced by the low -cost producer, and therefore increases industry efficiency.