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Market Transparency and Competition Policy


  • H. Peter Møllgaard

    (Dept. of Economics, Copenhagen Business School)

  • Per Baltzer Overgaard

    (School of Economics and Management, University of Aarhus)


We survey some of the literature on the effects of improved market transparency on competition in oligopoly. Generally, improved transparency from the perspective of firms makes detection of deviations from tacitly collusive agreements easier, thus facilitating oligopolistic coordination. On the other hand, improved transparency from the perspective of consumers, particularly in terms of easier comparability of goods characteristics, has ambiguous effects: More elastic demands make deviations from collusive prices more profitable to firms in the short run, but they also make future retaliation by rivals more severe. Which of these forces will dominate in a dynamic oligopoly competition is shown to depend on the markets-specifics. In light of the theoretical results, we discuss the likely effects on inter-firm competition of information exchange and online trading institutions as well as the American and European competition policy attitude towards market transparency.

Suggested Citation

  • H. Peter Møllgaard & Per Baltzer Overgaard, 2001. "Market Transparency and Competition Policy," CIE Discussion Papers 2001-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:2001-03

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    References listed on IDEAS

    1. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 173-191.
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    Cited by:

    1. Møllgaard, Peter, 2002. "Must Trust Bust?," Working Papers 02-2002, Copenhagen Business School, Department of Economics.
    2. Gu, Yiquan & Wenzel, Tobias, 2015. "Consumer confusion, obfuscation, and price regulation," RIEI Working Papers 2015-04, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration.
    3. Per Baltzer Overgaard & Peter Møllgaard, 2005. "Information Exchange, Market Transparency and Dynamic Oligopoly," CIE Discussion Papers 2005-11, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    4. Rasch, Alexander & Herre, Jesko, 2013. "Customer-side transparency, elastic demand, and tacit collusion under differentiation," Information Economics and Policy, Elsevier, vol. 25(1), pages 51-59.
    5. Nils-Henrik M. von der Fehr, 2013. "Transparency in Electricity Markets," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    6. Schouteten, Joachim & Van Lembergen, Katrien & Molnár, Adrienn & Tarantini, Federico & Heene, Aimé & Gellynck, Xavier, 2014. "The European Food Prices Monitoring Tool as a Prerequisite for more Price Transparency in the Food Chain," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199387, International European Forum on Innovation and System Dynamics in Food Networks.
    7. KNAUFF, Malgorzata, 2006. "Market transparency and Bertrand competition," CORE Discussion Papers 2006037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    More about this item


    market transparency; repeated oligopoly; secret price-cutting; customer switching;

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices


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