The Economics of Information Exchange between Competitors: Identifying the Optimal Policy Approach for Competition Authorities
53 Pages Posted: 26 Oct 2018
Date Written: October 10, 2012
Identifying the optimal policy approach for competition authorities to deal with information exchange between competitors is a challenge. The law has made clear that under some circumstances sharing information is deemed anti-competitive, and in other circumstances it will be permitted. However, there remains a significant ‘grey area’, where there are no clear economic or legal rules on how to treat information exchange. This results in significant uncertainty for companies and competition authorities alike. This paper analyses the economic literature in the area of information exchange, and considers both the positive effects on consumer welfare and the anti-competitive effects resulting from collusion. Ideally, competition authorities should implement clearer policy rules based on economic research demonstrating when the benefits of sharing information outweigh the negative effects. However, until economic theory can tell us more about the efficiency gains that can only be achieved through competitors exchanging information, policy rules for the ‘grey areas’ will be very difficult to implement.
Keywords: information exchange, antitrust, competition, policy, economics, tacit collusion, oligopoly, consumer welfare, competition authorities
JEL Classification: K21, L41, L44
Suggested Citation: Suggested Citation