Information exchange through non-binding advance price announcements : an antitrust analysis


Boshoff, Willem ; Frübing, Stefan ; Hüschelrath, Kai


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URL: https://ub-madoc.bib.uni-mannheim.de/39735
URN: urn:nbn:de:bsz:180-madoc-397351
Document Type: Working paper
Year of publication: 2015
The title of a journal, publication series: ZEW Discussion Papers
Volume: 15-060
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L41 , K21,
Keywords (English): Antitrust policy , collusion , information exchange , price announcements
Abstract: We study the welfare effects of non-binding advance price announcements. Applying a differentiated Bertrand model with horizontal products and asymmetric information, we find that such announcements can help firms to gain information on each other thereby allowing them to achieve higher profits. However, our results also show that the overall welfare effects of such announcements in a context of heterogeneous products are not as clear-cut as previous research in a homogeneous products framework has suggested. We conclude that – although non-binding advance price announcements may raise competition concerns – in many settings, their positive effects are likely to outweigh the potential detrimental effects on welfare.




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