Does Knowledge About the Presence of a Maverick in the Market Influence the Price Level?
The experiment presented in this video constructs a heterogeneous duopoly of firms – on the one hand a firm with an internal structure leading to low prices, and on the other hand a firm acting collusively in price-setting. MICHAEL KURSCHILGEN explains that transparency about the competitor’s internal structure hampers tacit collusion: If the collusive firm is aware of the other firm’s internal structure, the firms will compete on prices and prices will decline; otherwise, both firms will collude on price-setting and prices will rise.
DOI:
https://doi.org/10.21036/LTPUB10021Technical University of Munich (Technische Universität München)
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