Cost Coordination.
In markets with price discrimination, firms can face a trade‐off when colluding. To maintain price discrimination, upper‐level executives may have to involve lower‐level employees with the requisite demand information but that enhances the risk of the cartel's discovery. They could instead centraliz...
| Published in: | RAND Journal of Economics (Wiley-Blackwell) Vol. 56; no. 3; pp. 285 - 302 |
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| Format: | Article |
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Wiley-Blackwell
Fall2025
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| Online Access: | View this record in EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=187745202&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 187745202 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 07416261 56RJ jtl: RAND Journal of Economics (Wiley-Blackwell) issn: 07416261 maglogo: Y pubinfo: dt: Fall2025 vid: 56 iid: 3 pid: 480 pub: Wiley-Blackwell artinfo: ui: 187745202 10.1111/1756-2171.70000 ppf: 285 ppct: 17 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 576KB tig: atl: Cost Coordination. aug: au: Harrington, Joseph E. affil: Department of Business Economics & Public Policy, The Wharton School, University of Pennsylvania, Philadelphia Pennsylvania, 19104, , USA su: Heterogeneity Price discrimination Product differentiation Cartels Price regulation Collusion Cost control sug: subj: Heterogeneity Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors Price discrimination Product differentiation Cartels Price regulation Collusion Cost control ab: In markets with price discrimination, firms can face a trade‐off when colluding. To maintain price discrimination, upper‐level executives may have to involve lower‐level employees with the requisite demand information but that enhances the risk of the cartel's discovery. They could instead centralize pricing authority, but that means less price discrimination. Here, we consider a third option, which is for executives to coordinate on inflating the cost used in pricing by lower‐level employees. Coordinating cost reports is shown to be more profitable than coordinating prices when market heterogeneity is sufficiently great or firms' products are sufficiently differentiated. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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