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Collusion in Markets with Imperfect Price Information on Both Sides

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  • Christian Schultz

    (University of Copenhagen)

Abstract

The paper considers tacit collusion in markets that 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 that affects transparency positively on both sides are pro-competitive. With two standard information technologies, this holds when firms are easier to inform than are consumers.

Suggested Citation

  • Christian Schultz, 2017. "Collusion in Markets with Imperfect Price Information on Both Sides," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(3), pages 287-301, May.
    • Handle: RePEc:kap:revind:v:50:y:2017:i:3:d:10.1007_s11151-016-9539-7
    DOI: 10.1007/s11151-016-9539-7
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    References listed on IDEAS

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    Cited by:

    1. Fischer, Christian & Rasch, Alexander & Wenzel, Tobias, 2020. "Complex pricing and consumer-side attention," ZEW Discussion Papers 20-075, ZEW - Leibniz Centre for European Economic Research.
    2. Tuomas Takalo, 2019. "Regulation of short-term consumer credits," Journal of Banking Regulation, Palgrave Macmillan, vol. 20(4), pages 348-354, December.
    3. Xu, Lili & Matsumura, Toshihiro, 2023. "Market transparency in a mixed oligopoly," MPRA Paper 118415, University Library of Munich, Germany.
    4. Luke Garrod & Matthew Olczak, 2021. "Supply‐ vs. Demand‐Side Transparency: The Collusive Effects Under Imperfect Public Monitoring," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 537-560, September.
    5. Martin Obradovits & Philipp Plaickner, 2020. "Price-Directed Search and Collusion," Working Papers 2020-24, Faculty of Economics and Statistics, Universität Innsbruck.

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