On 4th July 2016 (1-2pm) Tobias Wenzel, Senior Lecturer at the Department of Economics at the University of Bath will give a presentation about “Hidden prices" in Q4.245. Afterwards, Mr. Wenzel will be available for questions and discussions. His presentation is part of https://wiwi.uni-paderborn.de/dep1/me/research/discussing-research/seam/.
We explore the incentives of firms to shroud prices in a model where consumers can be fooled by firms partitioning prices into an observable and a potentially unobservable price component. In the static game hidden prices can arise in equilibrium only if the market is sufficiently concentrated and the shrouded price component is sufficiently high. In the dynamic game we find strong pro-collusive effects of hidden prices in that firms can more easily collude than in standard Bertrand markets. Such collusive strategies can also be stable in markets with many competitors, but are moderated if consumer learning is important.