Facilitating Collusion with Spot-Price Contracting

Research Seminars: Virtual Market Design Seminar

The paper presented in this Virtual Marketing Design Seminar investigates the competitive effects of spot-price contracting, in which a buyer and seller contract to transact at a future date at the price prevailing in that market at that future date (the ''spot price''); such contracts are ubiquitous in the beef-processing industry, among others. The paper shows that spot-price contracting can facilitate collusion: When such contracts are available, firms can maintain monopsonistic prices at much lower market concentrations than in standard models of Bertrand competition, and some degree of non-competitive pricing can be maintained for any market concentration. The authors also show that the effect of differentiation on collusion in this setting is ambiguous: Monopsonistic pricing is most easily maintained at either high or low levels of differentiation, while more competitive pricing arises at intermediate levels of differentiation.

Veranstaltungsort

Online

28.10.2024
16:00 – 17:00 (CET)

The seminar presentations are scheduled to last 60 minutes: 45 minutes of presentation and 15 minutes for both comments and questions.

We will experiment with various methods for questions: A moderator collects questions during the presentation. Speakers will be encouraged to pause every few slides to allow a gap for questions. The moderator will relay clarification questions or unmute selectively during the talk. Remaining questions will be collected and asked in the discussion period.

Just like with other initiated virtual seminars, these rules are subject to change as we gain experience with how to handle the seminar most efficiently.

The idea for this format was borrowed from the Chamberlain Seminar. Other online seminars can be found at the AEA website.

The Virtual Market Design Seminar is an open online and inter-institutional seminar. The seminar was inspired by events that could not take place in person due to the COVID-19 pandemic. The resulting positive experiences ensured that it was continued after the pandemic. Seminars cover all fields from market design. Talks take place bi-weekly on Monday at 4:00-5:00pm CEST (Paris time) on Zoom.

Einheit