Collusion in Markets with Imperfect Price Information on Both Sides
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Collusion in Markets with Imperfect Price Information on Both Sides. / Schultz, Christian.
Centre for Industrial Economics, Department of Economics, University of Copenhagen, 2009.Research output: Working paper › Research
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TY - UNPB
T1 - Collusion in Markets with Imperfect Price Information on Both Sides
AU - Schultz, Christian
N1 - JEL Classification: L13, L40
PY - 2009
Y1 - 2009
N2 - The paper considers tacit collusion in markets which are not fully transparent on both sides. Consumers only detect prices with some probability before deciding which firm to purchase from, and each firm only detects the other firm's price with some probability. Increasing transparency on the producer side facilitates collusion, while increasing transparency on the consumer side makes collusion more difficult. Conditions are given under which increases in a common factor, affecting transparency positively on both sides, are pro-competitive. With two standard information technologies, this is so, when firms are easier to inform than consumers.
AB - The paper considers tacit collusion in markets which are not fully transparent on both sides. Consumers only detect prices with some probability before deciding which firm to purchase from, and each firm only detects the other firm's price with some probability. Increasing transparency on the producer side facilitates collusion, while increasing transparency on the consumer side makes collusion more difficult. Conditions are given under which increases in a common factor, affecting transparency positively on both sides, are pro-competitive. With two standard information technologies, this is so, when firms are easier to inform than consumers.
KW - Faculty of Social Sciences
KW - transparency
KW - tacit collusion
KW - cartel theory
KW - competition policy
KW - internet
M3 - Working paper
BT - Collusion in Markets with Imperfect Price Information on Both Sides
PB - Centre for Industrial Economics, Department of Economics, University of Copenhagen
ER -
ID: 13458193