Fighting Collusion by Permitting Price Discrimination

Arbeitspapier

We investigate the effect of a ban on third-degree price discrimination on the sustainability of collusion. We build a model with two firms that may be able to discriminate between two consumer groups. Two cases are analyzed: (i) Best-response symmetries so that profits in the static Nash equilibrium are higher if price discrimination is allowed. (ii) Best-response asymmetries so that profits in the static Nash equilibrium are lower if price discrimination is allowed. In both cases, firms’ discount factor has to be higher in order to sustain collusion in grim-trigger strategies under price discrimination than under uniform pricing.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5786

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Antitrust Law ; Oligopoly and Other Imperfect Markets ; Monopolization; Horizontal Anticompetitive Practices
• Subject: collusion ; duopoly ; grim-trigger strategies ; third-degree price discrimination

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Helfrich, Magdalena ; Herweg, Fabian
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/130409
• Last update: 10.03.2025, 11:42 AM CET