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Government-Assisted Oligopoly Coordination? A Concrete Case

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Author Info

  • Svend Albæk

    (Institute of Economics, University of Copenhagen)

  • Peter Møllgaard

    (Copenhagen Business School)

  • Per Baltzer Overgaard

    (University of Aarhus)

Abstract

Danish ready-mixed concrete is produced in regional oligopolies. Firms rely on price discrimination through secret discounts. The antitrust authority interprets this as lack of competition and has decided to activate its chief weapon against dormant competition: To make the market more transparent it now regularly publishes list prices and discounts of 5-7 firms and two grades of concrete in three regions. Following initial publication, average prices of reported grades increased by 15-20 percent while other prices increase by a mere 1-2 percent. The paper investigates whether this may be due to a business upturn, capacity constraints, etc., but none of these seem to have much explanatory power. In addition, prices of various non-reported grades moved in line with the general price level suggesting that a better explanation is the facilitation of tacit coordination brought about by the antitrust authority.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1997-03.

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Length: 24 pages
Date of creation: Feb 1997
Date of revision:
Publication status: Published in: Journal of Industrial Economics, December 1997, 45(4), 429-443
Handle: RePEc:kud:kuieci:1997-03

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Related research

Keywords: competition policy; tacit collusion; observability;

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