"The Rise and Fall of Judicial Self-Restraint" with Judge Richard Posner
03 Dec 2014 Leave a comment
in law and economics, Richard Posner Tags: constitutional law, Richard Posner, statutory interpretation
Richard Posner and Sam Peltzman joint interview 2009
02 Dec 2014 Leave a comment
in Richard Posner, Sam Peltzman Tags: Richard Posner, Sam Peltzman
Richard Posner on behavioural economics and its real-world applications
19 Nov 2014 Leave a comment
in applied price theory, behavioural economics, comparative institutional analysis, labour economics, occupational choice, Richard Posner Tags: behavioural economics, experimental economics, Richard Posner
Richard A. Posner – Our Domestic Intelligence Crisis
17 Nov 2014 Leave a comment
in economics of crime, law and economics, liberalism, Richard Posner, war and peace Tags: national security, privacy, Richard Posner, security and intelligence, terrorism
Posner and Epstein Debate Patent System
29 Jun 2014 Leave a comment
in law and economics, Richard Epstein, Richard Posner Tags: patents, Richard Epstein, Richard Posner
Richard Posner on constructive criticism in public policy
09 Jun 2014 Leave a comment
in organisational economics, Richard Posner Tags: Richard Posner
What is evidence of price collusion?
16 May 2014 Leave a comment
in industrial organisation, law and economics, Richard Posner Tags: cartels
Posner and Easterbrook suggest that these industry behaviours together are suspicious.
- Fixed relative market shares among top firms over time.
- Declining absolute market shares of the industry leaders.
- Persistent price discrimination.
- Certain types of exchanges of price information.
- Regional price variations.
- Identical sealed bids for tenders.
- Price, output, and capacity changes at the time of the suspected initiation of collusion.
- Industry-wide resale price maintenance or non-price vertical restraints.
- Relatively infrequent price changes; smaller price reactions as a result of known cost changes.
- Demand is highly responsive to price changes at market price.
- Level and pattern of profits relatively favourable to smaller firms.
- Particular pricing and marketing strategies.
Aaron Director’s most creative suggestion of evidence of price collusion is disputes between the marketing and finance departments of a large company. The market department wants to cut prices because there would be a large increase in sales. The finance department says no because this would take the price below the monopoly or agreed cartel price.
The next time you make an allegation of price fixing
15 May 2014 Leave a comment
in entrepreneurship, industrial organisation, law and economics, Richard Posner Tags: cartels
Remember this, firms are only likely to collude in certain market environments.
Brozen and Posner suggest the following pre-conditions to collusion
- market concentration on the supply side;
- no fringe of small sellers;
- high transport costs from neighbouring markets;
- small variations in production costs between firms;
- readily available information on prices;
- inelastic demand at the competitive price;
- low pre-collusion industry profits;
- long lags on new entry;
- many buyers (otherwise selective discounting to big buyers will be too tempting while monitoring adherence to the agreement will be difficult);
- no significant product differentiation;
- large suppliers selling at the same level in the distribution chain;
- a simple price, credit and distribution structure;
- price competition is more important than other forms of competition;
- demand is static or declining over time; and
- stagnant technological innovation and product redesign.
Stable collusive arrangements are thus likely to be rare; the absence of any of the conditions will tend to undermine the potential for successful collusion.
Utopia, you are standing in it! 
Recent Comments