Stefano Colombo and Aldo Pignataro

In this study, we investigate firms’ ability to collude when price discrimination based on the inherited market is possible, but the information accuracy about the inherited market is imperfect. We show that the level of information accuracy affects collusion sustainability nonmonotonically, according to the starting level of information and the consumers’ reservation price. Moreover, we show that banning price discrimination might increase the sustainability of tacit collusion.