How Product Innovation Can Affect Price Collusion

Andrew Smyth ()
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Andrew Smyth: Department of Economics, Marquette University and Economic Science Institute, Chapman University

Working Papers from Chapman University, Economic Science Institute

Abstract: Price conspiracies appear endemic in many markets. This paper conjectures that low expected returns from product innovation can affect price collusion in certain markets. This conjecture is tested—and supported—by both archival and experimental data. In particular, average market prices in low innovation experiments are significantly greater than those in high innovation, but otherwise identical experiments, because price collusion is more successful in the low innovation experiments.

Keywords: price collusion; product innovation; antitrust; experimental economics (search for similar items in EconPapers)
JEL-codes: C92 L10 L41 O33 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com, nep-exp, nep-gth, nep-ino and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:17-26

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