Title: Collusion on Surcharges under Uncertainty

Speaker: Chen Zhiqi, Chancellor's Professor of the Department of Economics, Carleton University, Canada. His main research fields are industrial organization theory and international trade. His research results have been published in international renowned academic journals such as American Economic Review, The RAND Journal of Economics, International Economic Review, The Economic Journal, International Journal of Industrial Organization, Canadian Journal of Economics, Journal of Industrial Economics, Economic Inquiry, Journal of Economic Dynamics and Control and Journal of Economics and Management Strategy.

Abstract: In the presence of demand uncertainty, collusion on rigid all-inclusive prices reduces the colluding firms’ flexibility in responding to demand shocks. With partitioned pricing, the firms alleviate this problem by colluding on one component of the price (surcharges) while allowing free choice of the other component (base prices). This paper shows that collusion on surcharges generates larger expected profits and is more sustainable than collusion on all-inclusive prices. It also compares collusion on surcharges with collusion on price schedules that make each firm’s all-inclusive price conditional on the realization of its demand shock. It demonstrates that compared with this more elaborate form of collusion on all-inclusive prices, collusion on surcharges is still more profitable.

Date & time: 21 May 2025, 09:30 - 11:00

Venue: Online, Tencent Meeting: 281 - 863 - 235