Collusion in Markets with Imperfect Price Information on Both Sides

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The paper considers tacit collusion in markets that are not fully transparent on both sides. Consumers only detect prices with some probability before deciding which firm to purchase from, and each firm only detects the other firm’s price with some probability. Increasing transparency on the producer side facilitates collusion, while increasing transparency on the consumer side makes collusion more difficult. Conditions are given under which increases in a common factor that affects transparency positively on both sides are pro-competitive. With two standard information technologies, this holds when firms are easier to inform than are consumers.
Original languageEnglish
JournalReview of Industrial Organization
Issue number3
Pages (from-to)287-301
Publication statusPublished - May 2017

ID: 178696704