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slides_class11a - Managerial Economics Class 11 1....

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Managerial Economics – Class 11 1. Anticompetitive practices 1. Collusion 2. Pricing-fixing 2. Externalities 1. Definition and examples 2. Role for government intervention
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What is collusion? 2
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Explicit vs implicit collusion
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Conditions that make collusion easier
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Price fixing and the Sherman act
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U.S. v Addyston Pipe & Steel (1899)
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American airlines case
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Archer Daniels Midlands (ADM) case
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ADM’s competitors
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The beginning of story
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Enter the FBI
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What did the cartel do?
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The informant cracks
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Antitrust outcomes
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The NASDAQ case
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Bid and ask prices
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The bid-ask spread: An example
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Competition among dealers
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Enter the academics
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Evidence of collusion?
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The end result
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What is predatory pricing?
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United vs Frontier
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United vs Frontier
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How do we identify predatory pricing?
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Reasons to be skeptical
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Other motives for predation?
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Low-cost signaling
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Example: American Tobacco
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Establishing a reputation
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slides_class11a - Managerial Economics Class 11 1....

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