Sharing Price Announcements

Maarten Janssen and Vladimir Karamychev

Games, 2025, vol. 16, issue 2, 1-25

Abstract: We present a simple model where, before competing in prices, firms announce which prices they intend to choose. Deviating from these announcements involves a cost. We show that sharing pricing intentions results in prices being set above their competitive levels. All equilibria result in prices that are higher than in the absence of announcements. When the deviation cost of not sticking to the price announcement is high, the unique equilibrium market outcome is asymmetric, as with price leadership. When this cost is low, a symmetric equilibrium exists with even higher prices. Product differentiation is a key ingredient to these results.

Keywords: collusion; price competition; information sharing; asymmetries (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2025
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