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Does Parallel Behavior Provide Some Evidence of Collusion?
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Paolo Buccirossi
Published/Copyright:
July 27, 2006
Antitrust authorities often consider parallel pricing and market share stability to be clues of illegal collusion. To analyze whether this inference is correct, I develop a model of price competition with differentiated products in which demand and costs vary over time. In many cases parallel pricing does not distinguish between a competitive and a collusive outcome. However, in some cases perfect parallel pricing is compatible only with a competitive equilibrium, and therefore provides some evidence that firms did not collude. I also show that the competitive equilibrium is characterized by a higher market share stability than a collusive equilibrium.
Published Online: 2006-7-27
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Buying Market Share: Agency Problem or Predatory Pricing?
- The Conspirator Dilemma: Introducing the "Trojan Horse" Enforcement Strategy
- The Optimal Magnitude and Probability of Fines with Court Congestion
- Economic Models and the Merger Guidelines: A Case Study
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