Collusion in Markets with Imperfect Price Information on Both Sides

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The paper considers tacit collusion in markets which 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, affecting transparency positively on both sides, are pro-competitive. With two standard information technologies, this is so, when firms are easier to inform than consumers.
Original languageEnglish
PublisherCentre for Industrial Economics, Department of Economics, University of Copenhagen
Number of pages18
Publication statusPublished - 2009

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ID: 13458193