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Government-Assisted Oligopoly Coordination? A Concrete Case

Author

Listed:
  • Svend Albæk

    (Institute of Economics, University of Copenhagen)

  • Peter Møllgaard

    (Copenhagen Business School)

  • Per Baltzer Overgaard

    (University of Aarhus)

Abstract

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.

Suggested Citation

  • Svend Albæk & Peter Møllgaard & Per Baltzer Overgaard, 1997. "Government-Assisted Oligopoly Coordination? A Concrete Case," CIE Discussion Papers 1997-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:1997-03
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    Keywords

    competition policy; tacit collusion; observability;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction

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