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Transparency and Tacit Collusion in a Differentiated Market

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  • Christian Schultz

Abstract

This paper investigates the effects on tacit collusion of increased market transparency on the consumer side of a market in a differentiated Hotelling duopoly. Increasing market transparency increases the benefits to a firm from underbutting the collusive price. It also decreases the punishment profit. The net effect is that collusion becomes harder to sustain. In the limiting homogeneous market, the effect vanishes. Here market transparency does not affect the possibilities for tacit collusion.

Suggested Citation

  • Christian Schultz, 2002. "Transparency and Tacit Collusion in a Differentiated Market," CESifo Working Paper Series 730, CESifo.
  • Handle: RePEc:ces:ceswps:_730
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    File URL: https://www.cesifo.org/DocDL/730.pdf
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    References listed on IDEAS

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    Cited by:

    1. Rune Stenbacka, 2002. "Microeconomic Policies in the New Economy," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 59-75, Autumn.

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