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Sharing Price Announcements

Author

Listed:
  • Maarten Janssen

    (Department of Economics, University of Vienna, 1010 Wien, Austria)

  • Vladimir Karamychev

    (Department of Economics, Erasmus School of Economics, 3062 PA Rotterdam, The Netherlands)

Abstract

We present a simple model where, before competing in prices, firms announce which prices they intend to choose. Deviating from these announcements involves a cost. We show that sharing pricing intentions results in prices being set above their competitive levels. All equilibria result in prices that are higher than in the absence of announcements. When the deviation cost of not sticking to the price announcement is high, the unique equilibrium market outcome is asymmetric, as with price leadership. When this cost is low, a symmetric equilibrium exists with even higher prices. Product differentiation is a key ingredient to these results.

Suggested Citation

  • Maarten Janssen & Vladimir Karamychev, 2025. "Sharing Price Announcements," Games, MDPI, vol. 16(2), pages 1-25, March.
    • Handle: RePEc:gam:jgames:v:16:y:2025:i:2:p:13-:d:1608711
    as

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