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Market Transparency and Competition Policy

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Author Info

  • H. Peter Møllgaard

    (Dept. of Economics, Copenhagen Business School)

  • Per Baltzer Overgaard

    (School of Economics and Management, University of Aarhus)

Abstract

We survey some of the literature on the effects of improved market transparency on competition in oligopoly. Generally, improved transparency from the perspective of firms makes detection of deviations from tacitly collusive agreements easier, thus facilitating oligopolistic coordination. On the other hand, improved transparency from the perspective of consumers, particularly in terms of easier comparability of goods characteristics, has ambiguous effects: More elastic demands make deviations from collusive prices more profitable to firms in the short run, but they also make future retaliation by rivals more severe. Which of these forces will dominate in a dynamic oligopoly competition is shown to depend on the markets-specifics. In light of the theoretical results, we discuss the likely effects on inter-firm competition of information exchange and online trading institutions as well as the American and European competition policy attitude towards market transparency.

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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 2001-03.

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Length: 34 pages
Date of creation: May 2001
Date of revision:
Handle: RePEc:kud:kuieci:2001-03

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Related research

Keywords: market transparency; repeated oligopoly; secret price-cutting; customer switching;

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Cited by:
  1. 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.
  2. KNAUFF, Malgorzata, 2006. "Market transparency and Bertrand competition," CORE Discussion Papers 2006037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. von der Fehr, Nils-Henrik M., 2013. "Transparency in Electricity Markets," Memorandum 13/2013, Oslo University, Department of Economics.
  4. Møllgaard, Peter, 2002. "Must Trust Bust?," Working Papers 02-2002, Copenhagen Business School, Department of Economics.
  5. Rasch, Alexander & Herre, Jesko, 2013. "Customer-side transparency, elastic demand, and tacit collusion under differentiation," Information Economics and Policy, Elsevier, vol. 25(1), pages 51-59.
  6. 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.

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