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Transparency and tacit collusion in a differentiated market

Christian Schultz
This paper investigates the effects on tacit collusion of increased market transparency on the consumer side of a market in a differentiated Hotelling duopoly. Increasing market transparency increases the benefits to a firm from underbutting the collusive price. It also decreases the punishment profit. The net effect is that collusion becomes harder to sustain. In the limiting homogeneous market, the effect vanishes. Here market transparency does not affect possibilities for tacit collusion.
Year of publication:
2002
Authors: Schultz, Christian
Publisher: Munich : Univ., Center for Economic Studies
Subject: Markttransparenz | Duopol | Duopoly | Wettbewerbsbeschränkung | Restraints of competition | Vollkommene Information | Complete information | Produktdifferenzierung | Product differentiation | Internet | Theorie | Theory | Hotelling-Modell | Hotelling model
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