Joseph Harrington, University of Pennsylvania: Collusion through Coordination of Announcements
ESOP seminar. Joseph Harrington is the Patrick T. Harker Professor of Business Economics and Public Policy at the Wharton School of Business, University of Pennsylvania. He will present a paper entitled "Collusion through Coordination of Announcements", co-authored by Lixin Ye.
Motivated by some recent collusive practices that do not constrain the prices that sellers offer, a theory of collusion is developed based on interpreting firms' actions as announcements about cost. By coordinating their announcements, firms are able to produce supracompetitive prices by influencing buyers' conduct. This form of collusion can actually improve welfare. Some initial insight is provided for when sellers would prefer to coordinate on cost announcements than coordinate on prices
Host: Tore Nilssen