Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/115886
Authors: 
Boshoff, Willem
Frübing, Stefan
Hüschelrath, Kai
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-060
Abstract: 
We study the welfare effects of non-binding advance price announcements. Applying a differentiated Bertrand model with horizontal products and asymmetric information, we find that such announcements can help firms to gain information on each other thereby allowing them to achieve higher profits. However, our results also show that the overall welfare effects of such announcements in a context of heterogeneous products are not as clear-cut as previous research in a homogeneous products framework has suggested. We conclude that - although non-binding advance price announcements may raise competition concerns - in many settings, their positive effects are likely to outweigh the potential detrimental effects on welfare.
Subjects: 
antitrust policy
collusion
information exchange
price announcements
JEL: 
L41
K21
Document Type: 
Working Paper

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