Imperfectly competitive product markets cannot be informationally efficient as private information has strategic implications interfering with price adjustment. This is illustrated in a duopoly model with sequential price setting where private information either leads to prices not being...

In imperfectly competitive markets, incentives for the acquisition and dissemination of information by prices is significantly affected by strategic considerations. Since prices reveal information, firms possessing market power may choose to set prices that are either biased or not adjusted to...