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Information Exchange, Market Transparency and Dynamic Oligopoly

Author Info

  • Per Baltzer Overgaard

    (University of Aarhus)

  • Peter Møllgaard

    (Copenhagen Business School)

Abstract

In the economics literature, various views on the likely (efficiency) effects of information exchange, communication between firms and market transparency present themselves. Often these views on information flows are highly conflicting. On the one hand, it is argued that increased information dissemination improves firm planning to the benefit of society (including customers) and/or allows potential customers to make the right decisions given their preferences. On the other hand, the literature also suggests that increased information dissemination can have significant coordinating or collusive potential to the benefit of firms but at the expense of society at large (mainly, potential customers). In this chapter, we try to make sense of these views, with the aim of presenting some simple lessons for antitrust practice. In addition, the chapter presents some cases, from both sides of the Atlantic, where informational issues have played a significant role.

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Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 2005-11.

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Length: 23 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:kud:kuieci:2005-11
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Find related papers by JEL classification:
  • 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
  • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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  1. Fuller, Stephen W. & Ruppel, Fred J. & Bessler, David A., 1990. "Effect Of Contract Disclosure On Price: Railroad Grain Contracting In The Plains," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
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  4. Robert H. Porter, 1983. "A Study of Cartel Stability: The Joint Executive Committee, 1880-1886," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 301-314, Autumn.
  5. H. Peter Møllgaard & Per Baltzer Overgaard, 2001. "Market Transparency and Competition Policy," Rivista di Politica Economica, SIPI Spa, vol. 91(4), pages 11-64, April-May.
  6. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
  7. 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.
  8. Stiglitz, Joseph E., 1989. "Imperfect information in the product market," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 13, pages 769-847 Elsevier.
  9. H. Peter Møllgaard & Per Baltzer Overgaard, 1999. "Market Transparency: A Mixed Blessing?," CIE Discussion Papers 1999-15, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Feb 2000.
  10. Kai-Uwe Kühn, 2001. "Fighting collusion by regulating communication between firms," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 167-204, 04.
  11. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
  12. Luca Lambertini & Dan Sasaki, 1999. "Optimal punishments in linear duopoly supergames with product differentiation," Journal of Economics, Springer, vol. 69(2), pages 173-188, June.
  13. Schultz, Christian, 2005. "Transparency on the consumer side and tacit collusion," European Economic Review, Elsevier, vol. 49(2), pages 279-297, February.
  14. Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June.
  15. Glenn Ellison, 1994. "Theories of Cartel Stability and the Joint Executive Committee," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 37-57, Spring.
  16. Nikolaos Georgantzís & Gerardo Sabater-Grande, 2002. "Market Transparency and Collusion: On the UK Agricultural Tractor Registration Exchange," European Journal of Law and Economics, Springer, vol. 14(2), pages 129-150, September.
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Cited by:

  1. Wilson, Chris, 2006. "Markets with Search and Switching Costs," MPRA Paper 131, University Library of Munich, Germany, revised 06 Oct 2006.
  2. 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.
  3. 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).
  4. Anne Margarian, 2013. "A Constructive Critique of the Endogenous Development Approach in the European Support of Rural Areas," Growth and Change, Wiley Blackwell, vol. 44(1), pages 1-29, 03.

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