Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Tuesday, July 11, 2017

The scope for collusion under different pricing schemes

Rasch, Alexander and Gössl, Florian examine The scope for collusion under different pricing schemes.

ABSTRACT: We analyze and compare the incentives to collude under different pricing schemes in a differentiated-products market where customers have elastic demand. We show that allowing firms to set two-part tariffs as opposed to linear prices facilitates collusion at maximum prices independent of the degree of differentiation. However, compared to a situation where firms can only set fixed fees that are independent of the quantity purchased, collusion at maximum prices is less sustainable with two-part tariffs. The results have important implications for competition policy where the perspective—static or dynamic—may be crucial.

http://lawprofessors.typepad.com/antitrustprof_blog/2017/07/the-scope-for-collusion-under-different-pricing-schemes.html

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