The Department of Economics invites you to a Faculty seminar with David Byrne, Professor of Economics at the University of Melbourne.
We study how firms negotiate collusive pricing structures when communicating through prices rather than natural language. Using hourly station-level retail gasoline price data, we document a five-year transition from a focal-pricing to a price-signaling structure, driven by inter-firm bargaining under strategic uncertainty. Along the transition, recurring price wars serve a dual role: beyond enforcement, they yield informative signals that facilitate equilibrium selection. The transition ultimately yields a 30% increase in margins and triggers a federal antitrust case. We discuss implications for the theory of collusion and antitrust policies that shape the competitive effects of digital information sharing and pricing algorithms.
If you have any queries regarding the seminar, please contact the seminar organisers Jonna Olsson, Andreas Haller, Morten N. Støstad or Helene Bjørndal Fosse.