American Economic Review Vol. 93 No. 5 2003
Price Ceilings as Focal Points for Tacit Collusion: Evidence from Credit Cards
Abstract
We test whether a nonbinding price ceiling may serve as a focal point for tacit collusion, using data from the credit card market during the 1980’s. Our empirical model can distinguish instances when firms match a binding ceiling from instances when firms tacitly collude at a nonbinding ceiling. The results suggest that tacit collusion at nonbinding state-level ceilings was prevalent during the early 1980’s, but that national integration of the market reduced the sustainability of tacit collusion by the end of the decade. The results highlight a perverse effect of price regulation.
- DOI
- 10.1257/000282803322655509
- Volume
- 93
- Issue
- 5
- Pages
- 1703-1729
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex