We investigate the impact of information sharing between rivals in a dynamic auction
with asymmetric information. Firms bid in sequential auctions to obtain inputs.
Their inventory of inputs, determined by the results of past auctions, are privately
known state variables that determine bidding incentives. The model is analyzed numerically
under different information sharing rules. The analysis uses the restricted
experience based equilibrium concept of Fershtman and Pakes (2012) which we refine
to mitigate multiplicity issues. We find that increased information about competitors’
states increases participation and inventories, as the firms are more able to avoid the
intense competition in low inventory states. While average bids are lower, social welfare
is unchanged and output is increased. Implications for the posture of antitrust
regulation toward information sharing agreements are discussed.