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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)

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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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Publisher 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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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction

Cited by:
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  1. Møllgaard, Peter, 2002. "Must Trust Bust?," Working Papers 02-2002, Copenhagen Business School, Department of Economics. [Downloadable!]
  2. Liliane Karlinger, 2008. "How Demand Information Can Destabilize a Cartel," Vienna Economics Papers 0803, University of Vienna, Department of Economics. [Downloadable!]
  3. Per Baltzer Overgaard & H. Peter Møllgaard, 2007. "Information Exchange, Market Transparency and Dynamic Oligopoly," Economics Working Papers 2007-03, School of Economics and Management, University of Aarhus. [Downloadable!]
    Other versions:
  4. Cotterill, Ronald W. & Dhar, Tirtha, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Research Reports 25189, University of Connecticut, Food Marketing Policy Center. [Downloadable!]
  5. Lommerud, Kjell Erik & Sørgard, Lars, 2002. "Entry in Telecommunication: Customer Loyalty, Price Sensitivity and Access Prices," CEPR Discussion Papers 3502, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Ireland, Norman & Waterson, Michael, 2006. "Cartels and Search," The Warwick Economics Research Paper Series (TWERPS) 770, University of Warwick, Department of Economics. [Downloadable!]
  7. Boone, J. & Potters, J., 2002. "Transparency, prices, and welfare with imperfect substitutes," Discussion Paper 7, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  8. Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1998. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," Industrial Organization 9803004, EconWPA. [Downloadable!]
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  9. Jakub Kastl & Salvatore Piccolo, 2004. "Collusive Effects of Vertical Restraints under Asymmetric Information," CSEF Working Papers 113, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  10. Christian Growitsch & Thomas Wein, 2005. "Negotiated Third Party Access—An Industrial Organisation Perspective," European Journal of Law and Economics, Springer, vol. 20(2), pages 165-183, September. [Downloadable!] (restricted)
  11. Morten Hviid & H. Peter Møllgaard, 2000. "Countervailing Power and Price Transparency," CIE Discussion Papers 2000-01, University of Copenhagen. Department of Economics. Centre for Industrial Economics. [Downloadable!]
    Other versions:
  12. H. Peter Møllgaard & Per Baltzer Overgaard, 1999. "Market Transparency: A Mixed Blessing?," CIE Discussion Papers 1999-15, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Feb 2000. [Downloadable!]
  13. Waterson, Michael, 2001. "The role of consumers in competition and competition policy," The Warwick Economics Research Paper Series (TWERPS) 607, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
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