Tuesday, August 24, 2010

Posted Pricing as a Plus Factor

Posted by D. Daniel Sokol

Joe Harrington (Johns Hopkins - Econ) discusses Posted Pricing as a Plus Factor.

ABSTRACT: This paper identifies conditions under which an industry-wide practice of posted (or list) pricing is a plus factor sufficient to conclude that firms violated Section 1 of the Sherman Act. For certain classes of markets, it is shown that, under competition, all firms setting a list price with a policy of no discounting is contrary to equilibrium. Thus, if all firms choose posted pricing, it is to facilitate collusion by making it easier for them to coordinate their prices. It is then argued that the adoption of posted pricing communicates the necessary intent and reliance to conclude concerted action.


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