Transparency and Competition

Arvid Nilsson
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Arvid Nilsson: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

No 298, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: This paper examines the effects of search costs on prices in a Bertrand duopoly. It is shown that if the search cost is lowered, the expected price goes down in a single play of the stage game. However, if the game is repeated it may be easier to sustain collusion the lower the search cost. In other words increased transparency may facilitate collusion even if the sellers' information is unaffected. A transitory improvement of price transparency unambiguously leads to lower prices. Hence, the model provides theoretical support for the price publication practices of consumers' councils.

Keywords: Bertrand Oligopoly; Collusion; Competition Policy; Imperfect Information; Transparency (search for similar items in EconPapers)
JEL-codes: C72 C73 L13 L41 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1999-02-04, Revised 1999-11-29
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (16)

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