Collusion with Intertemporal Price Dispersion

46 Pages Posted: 11 Mar 2015 Last revised: 23 Feb 2018

See all articles by Nicolas de Roos

Nicolas de Roos

University of Liverpool; University of Sydney

Vladimir Smirnov

The University of Sydney - School of Economics

Date Written: June 9, 2017


We develop a theory of optimal collusive intertemporal price dispersion. Dispersion clouds consumer price awareness, encouraging firms to coordinate on dispersed prices. Our theory generates a collusive rationale for price cycles and sales. Patient firms can support optimal collusion at the monopoly price. For less patient firms, monopoly prices must be punctuated with fleeting sales. The most robust structure involves asymmetric price cycles resembling Edgeworth cycles. Low consumer attentiveness enhances the effectiveness of price dispersion by reducing the payoff to deviations involving price reductions. However, for sufficiently low attentiveness, price rises are also a concern, limiting the power of obfuscation.

Keywords: Collusion, obfuscation, price dispersion

JEL Classification: L13, D83

Suggested Citation

de Roos, Nicolas and Smirnov, Vladimir, Collusion with Intertemporal Price Dispersion (June 9, 2017). Available at SSRN: or

Nicolas De Roos (Contact Author)

University of Liverpool ( email )

Chatham Street
Brownlow Hill
Liverpool, L69 7ZA
United Kingdom

University of Sydney ( email )

University of Sydney
Sydney NSW 2006

Vladimir Smirnov

The University of Sydney - School of Economics ( email )

Rm 370 Merewether (H04)
The University of Sydney
Sydney, NSW 2006 2008

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