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Fighting Collusion by Permitting Price Discrimination

Magdalena Helfrich and Fabian Herweg ()

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if price discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if price discrimination is allowed. In both cases, firms' discount factor has to be higher in order to sustain collusion in grim-trigger strategies under price discrimination than under uniform pricing.

JEL-codes: D43 K21 L13 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-com, nep-law and nep-mic
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Citations: View citations in EconPapers (10)

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Journal Article: Fighting collusion by permitting price discrimination (2016) Downloads
Working Paper: Fighting Collusion by Permitting Price Discrimination (2016) Downloads
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