Information exchange through non-binding advance price announcements: an antitrust analysis

Willem Boshoff, Stefan Frübing and Kai Hüschelrath ()
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Kai Hüschelrath: ZEW Centre for European Economic Research and MaCCI Mannheim Centre for Competition and Innovation
Authors registered in the RePEc Author Service: Kai Hueschelrath

European Journal of Law and Economics, 2018, vol. 45, issue 3, No 2, 439-468

Abstract: Abstract We study the welfare effects of non-binding advance price announcements. Applying a simulation-based approach in a differentiated Bertrand model with horizontal products and asymmetric information, we find that such announcements can help firms to gain information on each other thereby allowing them to achieve higher profits. However, our results also show that the overall welfare effects of such announcements in a context of heterogeneous products are not as clear-cut as previous research in a homogeneous products framework has suggested. We conclude that—although non-binding advance price announcements may raise competition concerns—in many settings, their positive effects are likely to outweigh the potential detrimental effects on welfare.

Keywords: Antitrust policy; Collusion; Information exchange; Price announcements (search for similar items in EconPapers)
JEL-codes: K21 L41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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Working Paper: Information exchange through non-binding advance price announcements: An antitrust analysis (2015)
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DOI: 10.1007/s10657-016-9549-9

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