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Price Deception, Market Power and Consumer Policy

Author

Listed:
  • Chris Wilson

    (Department of Economics, University of Oxford)

Abstract

This paper presents a model in which a firm attempts to gain market power by pricing above the competitive market price and simply trying to persuade ill-informed consumers not to search for other lower priced firms. Fictitious price comparisons, or false sale signs could be used in this way to deceptively and profitably deter consumer search. A simplified model shows how this mechanism could exist when combined with moderately enforced consumer regulatory policy.

Suggested Citation

  • Chris Wilson, 2004. "Price Deception, Market Power and Consumer Policy," Working Papers 04-1, Centre for Competition Policy, University of East Anglia.
    • Handle: RePEc:ccp:wpaper:wp04-01
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP04-1.pdf
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    More about this item

    Keywords

    Price communications; search deterrence; market power; cheap talk;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other

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