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

Øystein Foros and Mai Nguyen-Ones ()
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Mai Nguyen-Ones: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

No 2020/14, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

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)
Pages: 8 pages
Date: 2020-11-18
New Economics Papers: this item is included in nep-com, nep-ene and nep-ind
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