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Coordinate to obfuscate? The role of prior announcements of recommended prices

Øystein Foros and Mai Nguyen-Ones

Economics Letters, 2021, vol. 198, issue C

Abstract: Firms may want to coordinate industry-wide price jumps that are predictable for rivals, however, unpredictable for consumers. We show how such coordination is carried out in Norwegian gasoline retailing. Overnight, the market leader initiated an equilibrium transition from regular to non-regular price jumps Prior announcements of a non-transaction price variable, recommended prices, are used to coordinate the timing and the level of industry-wide price jumps.

Keywords: Price coordination; Consumer obfuscation; Prior announcements (search for similar items in EconPapers)
JEL-codes: D22 D43 L11 L13 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.econlet.2020.109680

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