Government-Assisted Oligopoly Coordination? A Concrete Case
Danish ready-mixed concrete is produced in regional oligopolies. Firms rely on price discrimination through secret discounts. The antitrust authority interprets this as lack of competition and has decided to activate its chief weapon against dormant competition: To make the market more transparent it now regularly publishes list prices and discounts of 5-7 firms and two grades of concrete in three regions. Following initial publication, average prices of reported grades increased by 15-20 percent while other prices increase by a mere 1-2 percent. The paper investigates whether this may be due to a business upturn, capacity constraints, etc., but none of these seem to have much explanatory power. In addition, prices of various non-reported grades moved in line with the general price level suggesting that a better explanation is the facilitation of tacit coordination brought about by the antitrust authority.
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|Date of creation:||Feb 1997|
|Date of revision:|
|Publication status:||Published in: Journal of Industrial Economics, December 1997, 45(4), 429-443|
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