This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

« Back to Results

Non-Price Collusion

Paper Session

Sunday, Jan. 5, 2020 10:15 AM - 12:15 PM (PDT)

Marriott Marquis, Torrey Pines 2
Hosted By: American Economic Association
  • Chair: Cuicui Chen, State University of New York-Albany

The Ice Cream Split: Empirically Distinguishing Price and Product Space Collusion

Christopher John Sullivan
,
University of Wisconsin-Madison

Abstract

In a market for differentiated products, firms have the ability to collude on the choice of products offered in addition to or in lieu of colluding on the prices charged for those products. This paper proposes a methodology to measure product space and price collusion. The static equilibria index the degree to which firms collude through reduced-form parameters. I show that these parameters can be estimated using standard techniques when researchers have access to market level data. I then use this methodology to study competition in the market for super-premium ice cream during 2013. I find evidence that Ben & Jerry’s and Häagen-Dazs not only tacitly colluded on the prices they charged, but also tacitly colluded on the choice of flavors that were offered. Then, I construct counterfactuals to measure the impact of tacit collusion on the set of products offered, the prices charged, and welfare. I find that conventional policy analysis that considers only price collusion understates the welfare effects.

Trade Associations and Collusion among Many Agents: Evidence from Physicians

Jorge Ale-Chilet
,
Bar-Ilan University
Juan Pablo Atal
,
University of Pennsylvania

Abstract

We study a recent case where most gynecologists in one city formed a trade association to bargain for better rates with insurance companies. After unsuccessful negotiations, the physicians jointly terminated their insurer contracts and set a minimum price. We find that subsequent realized prices coincided with Nash-Bertrand prices, and that the minimum price was barely binding. We show that these actions ensured the association’s stability and increased profits. Our findings shed light on the role of trade association in collusion among a large number of heterogeneous agents, and provide insights for the antitrust analysis of trade associations.

Colluding Against Environmental Regulation: The Case of German Automakers

Cuicui Chen
,
State University of New York-Albany
Jorge Ale-Chilet
,
Bar-Ilan University
Jing Li
,
Massachusetts Institute of Technology

Abstract

Regulation oftentimes necessitates technology adoption. What happens when firms coordinate instead of compete in technology adoption? We study the welfare consequence of the confirmed collusion among five German automakers in holding back the adoption of effective NO$_x$ control technology in diesel passenger vehicles starting in 2006. Based on our estimates of how adopting the effective technology would have reduced desirable cargo space and fuel economy, we build and estimate a structural model of collusion in technology adoption in which firms may not comply with environmental regulation and, therefore, face the risk of being detected by the regulator. With the estimated model, we examine how social welfare would have improved if firms had instead competed in technology adoption, and draw quantitative implications for both antitrust policy and environmental regulation.
JEL Classifications
  • L4 - Antitrust Issues and Policies
  • D2 - Production and Organizations