Price Transparency: Will a Greater Degree of Price Transparency Help or Harm Buyers?
Although enhanced price transparency will generally increase competition to the benefit of consumers, this paper argues that it can have the opposite effect in some special situations. A negative impact is especially likely in markets already prone to anti-competitive coordination. In such markets, competition authorities should be suspicious of competitors exchanging price data, or engaging in any other practice that could help focus anti-competitive arrangements or help competitors more than customers to react to price changes. They should also be wary of exchanges of non-binding future prices. The paper identifies a number of key factors to consider in assessing whether increased price transparency might raise the probability of anticompetitive co-ordination. That includes having a look at meeting competition and most favored nation clauses, and the practice of base point pricing. The paper also examines price transparency as regards information exchanges within trade associations, price advertisements, and mandatory price transparency in public procurement markets. It closes with a short list of questions competition authorities might wish to keep in mind when investigating the effects of price transparency. This OECD Competition Roundtable was held in June 2001.
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Volume (Year): 5 (2003)
Issue (Month): 1 ()
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