List Price Collusion

Boshoff, Willem H.; Paha, Johannes

doi:10.1007/s10842-021-00360-w

Cited by 10 publications

(4 citation statements)

References 43 publications

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“…This practice, however, has appeared repeatedly over the last years in the competition policy landscape on both sides of the Atlantic. Harrington and Ye (2019) and Boshoff and Paha (2021), for instance, survey some cartel cases where list prices (a particular form of price caps) have been strategically used for (implicit) collusive purposes. In the United States, list price coordination has attracted antitrust scrutiny since the 1970s, with Hay and Kelly (1974) presenting a range of examples suggesting that list prices were a prevalent competitive concern at the time of their study.…”

Section: Discussionmentioning

confidence: 99%

Upstream conduct and price authority with competing organizations

Andreu¹,

Neven²,

Piccolo

et al. 2023

Economics Manag Strategy

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We characterize the degree of price authority that competing upstream principals award their downstream agents in a setting where these agents own private information about demand and incur nonverifiable distribution costs. Principals cannot internalize these costs through monetary incentives and design “permission sets” from which agents choose prices. The objective is to understand the forces shaping delegation and the constraints imposed on equilibrium prices. When principals behave noncooperatively, agents are biased toward excessively high prices because they pass on distribution costs to consumers. Hence, the permission set only features a price cap that is more likely to bind as products become closer substitutes, in sectors where distribution is sufficiently costly, and when demand is not too volatile. By contrast, when principals behave cooperatively, the optimal delegation scheme is richer and more complex. Because principals want to charge the monopoly price, the optimal permission set features a price floor when the distribution cost is sufficiently low, it features instead full discretion for moderate values of this cost, and only when it is high enough, a price cap is optimal. Surprisingly, while competition (as captured by stronger product substitutability) hinders delegation in the noncooperative regime, the opposite occurs when principals maximize industry profit.

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Section: Discussionmentioning

confidence: 99%

Upstream conduct and price authority with competing organizations

Andreu¹,

Neven²,

Piccolo

et al. 2023

Economics Manag Strategy

View full text Add to dashboard Cite

show abstract

“…However, this authorization does not implicate them in anything expressed in this paper. 6 There are also works looking at the effect of list-price announcements and discount offers directed at final consumers (e.g., Raskovich, 2007;Gill and Thanassoulis, 2016). We come back to their connection to our theory below.…”

Section: Introductionmentioning

confidence: 95%

“…However, as explained by Boshoff and Paha (2021) and Harrington and Ye (2019), this would go against recent allegations on both sides of the Atlantic of suppliers effectively coordinating on list prices. A problem courts face in deciding these cases is that defendants often claim that, due to pervasive secret discounts, any ostensible list price coordination cannot have any anticompetitive effect.…”

Section: Introductionmentioning

confidence: 98%

“…This irrelevant result is in contrast to recent work by Harrington and Ye (2019) and Harrington (2022). 6 The reason is that these works rely on elements that are absent from our theory. In Harrington and Ye (2019) suppliers use list prices to coordinate on high-cost signals before buyers invite them to "negotiate," that is, to participate in their procurement auctions.…”

Section: Introductionmentioning

confidence: 99%

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Using List Prices to Collude or to Compete?

Cussen,

Montero

2024

The Economic Journal

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Collusion is deemed unlikely in wholesale markets where upstream suppliers and intermediate buyers privately negotiate discounts off list prices and sales quotas are unfeasible. However, many wholesale markets include both small and large buyers who compete in the retail market. We study the role of publicly announced list prices in this wholesale-retail setting, whether suppliers collude or compete. When suppliers collude, public announcements of list prices extend the possibility of collusion from small to large buyers (the multibuyer contact effect). When suppliers compete, these announcements provide them with commitment to negotiate better terms with large buyers (the commitment effect).

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Should Private Exchanges of List Price Information Be Presumed to Be Anticompetitive?

Klein

Neurohr

2023

J Ind Compet Trade

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Harrington (2022) provides a novel theory that explains how a private information exchange involving gross list prices can lead to higher transaction prices. On this basis, he considers that private list price exchanges between competitors should be presumed to harm competition. The theory, which has received much attention in the context of the EU trucks cartel case, was recently referred to by the UK Competition Appeal Tribunal as a “unilateral effects” theory, given that it involves no coordination once list prices have been exchanged. Unlike conventional collusion, the theory does not rely on a monitoring and retaliation mechanism. Given its novelty and relevance for recent competition cases, we consider it useful to explore its potential limitations. We show that both the scope for and magnitude of harm are sensitive to key modelling parameters such as the number of firms, the degree of product substitutability, and the level of marginal cost—sometimes in opposite directions. We also show that there may be no scope for the anticompetitive effect when firms are capacity constrained. Finally, we discuss several additional qualitative aspects that may undermine the theory of harm: the adaptability of internal pricing processes over time, the lack of verifiability of exchanged list price information (especially when the exchange is private), and possible procompetitive or competitively neutral reasons for the conduct. We conclude that, although Harrington provides an insightful addition to the wider literature on the competitive effects of information exchanges, the effects of list price exchanges are not sufficiently unambiguous to justify a general presumption of competitive harm.

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List Price Collusion

Cited by 10 publications

References 43 publications

Upstream conduct and price authority with competing organizations

Upstream conduct and price authority with competing organizations

Using List Prices to Collude or to Compete?

Should Private Exchanges of List Price Information Be Presumed to Be Anticompetitive?

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