Collusion with costly consumer search

Petrikaitė, Vaiva

doi:10.1016/j.ijindorg.2015.10.006

Cited by 15 publications

(12 citation statements)

References 16 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In other words, adding savvy consumers first makes cooperation easier to sustain, and then makes it more difficult. This result is similar to a result in Petrikaitė (). In our experiment, we consider only levels of μ in the lower range.…”

Section: Theoretical Analysissupporting

confidence: 91%

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Crosetto

Gaudeul

2017

Economics Manag Strategy

View full text Add to dashboard Cite

Firms with very similar products often present their products in different ways. This makes it difficult for consumers to find out which product fits their needs best, or which one is the cheapest. Why is there no convergence toward common ways to present products? Is it possible for firms to maintain high prices by confusing consumers? We run a market experiment to investigate those questions. In our market, firms choose how to present their products in addition to choosing their price. We find that firms maintain different ways to present their products and that this allows them to maintain high prices. This behavior is not consistent with competitive behavior, such as when firms adopt best responses to each other, imitate the most successful firm, or learn the best strategy over time. Rather, our results are only consistent with cooperation between firms. Firms cooperate by not imitating the way other firms present their products. Cooperation is maintained by the threat of tough competition if a firm makes its product easy to compare with others. Firms are all the more likely to maintain such cooperation if their products do not actually differ much. This is because in that case, maintaining differences in the presentation of their products is the only way to maintain profits.

show abstract

Section: Theoretical Analysissupporting

confidence: 91%

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Crosetto

Gaudeul

2017

Economics Manag Strategy

View full text Add to dashboard Cite

show abstract

“…Our work also has some connection to a literature examining the relationship between collusion and measures of demand‐side market transparency. Petrikaitė () and Nilsson () use consumer search costs as a proxy for transparency and find, in markets for undifferentiated products, that collusion is harder to sustain with higher search costs. Petrikaitė () and Schultz () consider the proportion of informed consumers as a measure of transparency.…”

Section: Introductionmentioning

confidence: 99%

“…Petrikaitė () and Nilsson () use consumer search costs as a proxy for transparency and find, in markets for undifferentiated products, that collusion is harder to sustain with higher search costs. Petrikaitė () and Schultz () consider the proportion of informed consumers as a measure of transparency. In the context of the Stahl () model of consumer search, Petrikaitė () finds a nonmonotonic relationship between this measure and the stability of collusion.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Collusion with limited product comparability

Roos

2018

The RAND J of Economics

View full text Add to dashboard Cite

We examine the effect of limited product comparability on the viability of collusion. Firms choose messages to influence consumer product comparison. The cartel hinders transparency on the equilibrium path and seeks it for optimal punishment. Five conditions are each sufficient to ensure obfuscation aids collusion: if firms can mix over messages or commit to messages, if messages are informative, or if an individual firm or the cartel can control comparability. We also analyze the impact of message differentiation and complexity for optimal messages, and identify a key role for the convexity or concavity of comparison probabilities in these features.

show abstract

“…13 See Schultz (2005) for this analysis, as well as its extension to a market with horizontally di¤erentiated products. Petrikaite (2014) analyzes an alternative model in which consumers can become informed about prices and valuations by incurring a search cost. She …nds that in an increase in this search cost-i.e., a reduction in market transparency-makes collusion easier to achieve.…”

mentioning

confidence: 99%

Search and Ripoff Externalities

Armstrong

2015

Rev Ind Organ

View full text Add to dashboard Cite

This paper surveys models of markets in which some consumers are "savvy"while others are not. We discuss when the presence of savvy consumers improves the deals available to non-savvy consumers in the market (the case of search externalities), and when the non-savvy fund generous deals for savvy consumers (ripo¤ externalities). We also discuss when the two groups of consumers have aligned or divergent views about market interventions. The analysis covers two overlapping families of models: those which examine markets with price/quality dispersion, and those which exhibit forms of consumer hold-up.

show abstract

Collusion with costly consumer search

Cited by 15 publications

References 16 publications

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Choosing not to compete: Can firms maintain high prices by confusing consumers?

Collusion with limited product comparability

Search and Ripoff Externalities

Contact Info

Product

Resources

About