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How Product Innovation Can Affect Price Collusion

42 Pages Posted: 3 Aug 2017  

Andrew Smyth

Marquette University - Department of Economics

Date Written: August 2, 2017

Abstract

Price conspiracies appear endemic in many markets. This paper conjectures that low expected returns from product innovation can affect price collusion in certain markets. This conjecture is tested---and supported---by both archival and experimental data. In particular, average market prices in low innovation experiments are significantly greater than those in high innovation, but otherwise identical experiments, because price collusion is more successful in the low innovation experiments.

Keywords: Price Collusion, Product Innovation, Antitrust, Experimental Economics

JEL Classification: L410, L100, O330, C920

Suggested Citation

Smyth, Andrew, How Product Innovation Can Affect Price Collusion (August 2, 2017). Available at SSRN: https://ssrn.com/abstract=3012572

Andrew Smyth (Contact Author)

Marquette University - Department of Economics ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

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