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Price discrimination or uniform pricing: Which colludes more?

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  • Horstmann, Niklas
  • Krämer, Jan

Abstract

Conventional wisdom attributes different economic outcomes of uniform pricing and price discrimination to the heterogeneity in market conditions or market participants, such as differences in demand elasticity or production costs. We offer a new explanation for the observed differences that relates to behavioral aspects rather than demand- or supply-side effects. In particular, in a symmetric Bertrand duopoly laboratory experiment, for which theory predicts no differences between the two pricing regimes, we find that tacit price collusion is systematically higher under price discrimination than under uniform pricing.

Suggested Citation

  • Horstmann, Niklas & Krämer, Jan, 2013. "Price discrimination or uniform pricing: Which colludes more?," Economics Letters, Elsevier, vol. 120(3), pages 379-383.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:379-383
    DOI: 10.1016/j.econlet.2013.05.011
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    References listed on IDEAS

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    Cited by:

    1. Krämer Jan & Vogelsang Ingo, 2016. "Co-Investments and Tacit Collusion in Regulated Network Industries: Experimental Evidence," Review of Network Economics, De Gruyter, vol. 15(1), pages 35-61, March.
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    3. Döpper, Hendrik & Rasch, Alexander, 2022. "Combinable products, price discrimination, and collusion," DICE Discussion Papers 377, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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    More about this item

    Keywords

    Price discrimination; Uniform pricing; Multimarket contact; Experimental economics; Collusion;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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