Collusion and Information Exchange

Abstract

Antitrust authorities view that exchange of individual firms’ sales data is more anti-competitive than that of aggregate sales data. In this paper, I survey antitrust implications of such inter-firm information exchange. I argue that both types of information exchange are anti-competitive under some circumstances. More precisely, I compare profits when each type of information exchange is allowed to that when firms can only observe their own sales (Stigler’s secret price-cutting model), and the former is bigger than the latter. I also provide a general method to bound the equilibrium profits without such information exchange.