Transparency and Tacit Collusion

Christian Schultz ()

No 2001-04, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: This paper investigates the effects on tacit collusion of increased market transparency on the consumer side as well as on the producer side of a market. Increasing market transparency on the consumer side, increases the benefits to a firm from undercutting the collusive price. It also decreases the punishment profit (whether the punishment is Nash-reversion or optimal punishment). The net effect is that collusion becomes harder to sustain. Increasing market transparency on the producer side facilitates collusion. When transparency is increased on both sides, the net effect is that collusion becomes harder to sustain.

Keywords: Transparency; tacit collusion; competition policy; internet (search for similar items in EconPapers)
JEL-codes: L13 L40 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2001-05
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Citations: View citations in EconPapers (2)

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