Episode Details
Back to Episodes
Why Price Fixing Is Easier to Describe Than to Prove | Cartels Ep. 2
Description
Two gas stations simultaneously raise their prices. And then they do it again. Their prices have not changed much. Their owners have been even talking. Is that enough evidence of price-fixing?
In episode 2 of How Cartels Really Work, we take a look at one of the key issues in cartel enforcement: the line between suspicious parallel behavior and evidence of an agreement.
Starting with a simple example of a gas station, we move through six observations of increasing importance. This includes simultaneous price increases and repeated matching, as well as competitor communications and evidence of an actual agreement.
We explore how the same pricing pattern can arise from two very different stories: either the competitors colluded to raise prices or they observed and reacted to each other independently.
The important question is not whether prices moved together. That’s why they moved together.
Read the full article and graphic analysis: https://blog.econworks.com/p/cartels-episode-2-why-price-fixing?r=562wri
Explore more visual economics content: https://econworks.com
YouTube: https://www.youtube.com/@EconWorks-d3e
Substack: https://blog.econworks.com
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit blog.econworks.com/subscribe