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Collusion with limited product comparability

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  • Nicolas de Roos

Abstract

We examine the effect of limited product comparability on the viability of collusion. Firms choose messages to influence consumer product comparison. The cartel hinders transparency on the equilibrium path and seeks it for optimal punishment. Five conditions are each sufficient to ensure obfuscation aids collusion: if firms can mix over messages or commit to messages, if messages are informative, or if an individual firm or the cartel can control comparability. We also analyze the impact of message differentiation and complexity for optimal messages, and identify a key role for the convexity or concavity of comparison probabilities in these features.

Suggested Citation

  • Nicolas de Roos, 2018. "Collusion with limited product comparability," RAND Journal of Economics, RAND Corporation, vol. 49(3), pages 481-503, September.
    • Handle: RePEc:bla:randje:v:49:y:2018:i:3:p:481-503
    DOI: 10.1111/1756-2171.12242
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    References listed on IDEAS

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    1. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
    2. Ran Spiegler, 2014. "Competitive Framing," American Economic Journal: Microeconomics, American Economic Association, vol. 6(3), pages 35-58, August.
    3. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
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    Cited by:

    1. Chioveanu, Ioana, 2020. "A more general model of price complexity," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    2. Nicolas de Roos & Vladimir Smirnov, 2020. "Collusion with intertemporal price dispersion," RAND Journal of Economics, RAND Corporation, vol. 51(1), pages 158-188, March.
    3. Wenzel, Tobias, 2024. "Collusion, inattentive consumers and shrouded prices," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 579-591.
    4. Roos, Nicolas de & Smirnov, Vladimir, 2021. "Collusion, price dispersion, and fringe competition," European Economic Review, Elsevier, vol. 132(C).
    5. Casner, Ben, 2020. "Seller curation in platforms," International Journal of Industrial Organization, Elsevier, vol. 72(C).

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