Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/181758
Authors: 
Peiseler, Florian
Rasch, Alexander
Shekhar, Shiva
Year of Publication: 
2018
Series/Report no.: 
DICE Discussion Paper 295
Abstract: 
We analyze firms' ability to sustain collusion in a setting in which horizontally differentiated firms can price-discriminate based on private information regarding consumers' preferences. In particular, firms receive private signals which can be noisy (e.g., big data predictions). We find that there is a non-monotone relationship between signal quality and sustainability of collusion. Starting from a low level, an increase in signal precision first facilitates collusion. However, there is a turning point from which on any further increase renders collusion less sustainable. Our analysis provides important insights for competition policy. In particular, a ban on price discrimination can help to prevent collusive behavior as long as signals are sufficiently noisy.
Subjects: 
Big Data
Collusion
Loyalty
Private Information
Third-Degree Price Discrimination
JEL: 
L13
D43
L41
ISBN: 
978-3-86304-294-3
Document Type: 
Working Paper
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