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The scope for collusion under different pricing schemes

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  • Rasch, Alexander
  • Gössl, Florian

Abstract

We analyze and compare the incentives to collude under different pricing schemes in a differentiated-products market where customers have elastic demand. We show that allowing firms to set two-part tariffs as opposed to linear prices facilitates collusion at maximum prices independent of the degree of differentiation. However, compared to a situation where firms can only set fixed fees that are independent of the quantity purchased, collusion at maximum prices is less sustainable with two-part tariffs. The results have important implications for competition policy where the perspective—static or dynamic—may be crucial.

Suggested Citation

  • Rasch, Alexander & Gössl, Florian, 2016. "The scope for collusion under different pricing schemes," Annual Conference 2016 (Augsburg): Demographic Change 145759, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145759
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • 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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