Colluding on Relative Prices
Ralph Winter ()
RAND Journal of Economics, 1997, vol. 28, issue 2, pages 359-371
Firms sometimes agree to limit the discounts they offer a class of customers, i.e., they collude on the price differences across consumer classes. Why? Courts have struck down agreements to limit discounts as violations of the laws against price-fixing. Are these collusive agreements in fact efficient? This article addresses these questions in a multiproduct duopoly model. Under one interpretation, the incentive to collude on relative prices can be traced to heterogeneity in consumers' time costs. Under fairly general conditions, total surplus increases with the collusion. This efficiency effect is most striking in the case where collusion raises the prices faced by all consumers over which firms compete.
References: Add references at CitEc
Citations View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819972 ... O%3B2-0&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:rje:randje:v:28:y:1997:i:summer:p:359-371
Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi
Access Statistics for this article
RAND Journal of Economics is currently edited by Summer
More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().