Oligopolistic Dynamics with Asymmetric Information : A Framework for Empirical Work ∗

Abstract

We develop a framework for the analysis of dynamic oligopolies with persistant sources of asymmetric information that enables applied analysis of situations of empirical importance that have been dicult to deal with. The framework generates policies which are \relatively" easy for agents to use while still being optimal in a meaningful sense, and is amenable to empirical research in that its equilibrium conditions can be tested and equilibrium policies are relatively ease to compute. We conclude with an example that endogenizes the maintenance decisions of electricity generators when the costs states of the generators are private information.