Price Ceilings as Focal Points for Tacit Collusion: Evidence from Credit Cards
We test whether a nonbinding price ceiling may serve as a focal point for tacit collusion, using data from the credit card market during the 1980's. Our empirical model can distinguish instances when firms match a binding ceiling from instances when firms tacitly collude at a nonbinding ceiling. The results suggest that tacit collusion at nonbinding state-level ceilings was prevalent during the early 1980's, but that national integration of the market reduced the sustainability of tacit collusion by the end of the decade. The results highlight a perverse effect of price regulation.
Year of publication: |
2003
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Authors: | Knittel, Christopher R. ; Stango, Victor |
Published in: |
American Economic Review. - American Economic Association - AEA. - Vol. 93.2003, 5, p. 1703-1729
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Publisher: |
American Economic Association - AEA |
Saved in:
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