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Transparency and Tacit Collusion

Author

Listed:
  • Christian Schultz

    (Institute of Economics, University of Copenhagen)

Abstract

This paper investigates the effects on tacit collusion of increased market transparency on the consumer side as well as on the producer side of a market. Increasing market transparency on the consumer side, increases the benefits to a firm from undercutting the collusive price. It also decreases the punishment profit (whether the punishment is Nash-reversion or optimal punishment). The net effect is that collusion becomes harder to sustain. Increasing market transparency on the producer side facilitates collusion. When transparency is increased on both sides, the net effect is that collusion becomes harder to sustain.

Suggested Citation

  • Christian Schultz, 2001. "Transparency and Tacit Collusion," CIE Discussion Papers 2001-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:2001-04
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    File URL: http://www.econ.ku.dk/cie/dp/dp_2000-2002/2001-04.pdf/
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    Cited by:

    1. Lommerud, Kjell Erik & Sorgard, Lars, 2003. "Entry in telecommunication: customer loyalty, price sensitivity and access prices," Information Economics and Policy, Elsevier, vol. 15(1), pages 55-72, March.
    2. Helbing, Dirk & Balietti, Stefano, 2011. "Big data, privacy, and trusted web: What needs to be done," MPRA Paper 49702, University Library of Munich, Germany.

    More about this item

    Keywords

    Transparency; tacit collusion; competition policy; internet;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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