RE: Libraries Urge Justice Departmen to Block Cinven and Candover Purchase of BertelsmannSpringer

["Karl A. Kocher" <kakocher@ucdavis.edu>]

On Wed, 4 Jun 2003, Peter Picerno wrote:

> >Well... it would challenge Elsevier by actually providing competition on
> >a similar scale, wouldn't it?
> 
> Or it would provide a much cozier climate for collusion on the fixing of
> prices and industrial agreement on price-inflation policies. I don't
> necessarily see two giant concerns as being 'competition' especially when
> they're both strictly non-academic (i.e., commercial, or profit-driven)
> agencies.
> 
> Just my cynical view.

The phrase oligopolistic pricing is sometimes used to refer to the
situation that results when a very few large firms "compete" in the market
they entirely dominate.  In fact, the argument is that they don't actually
compete, but find a pricing policy such that their individual returns are
higher than would have been obtained in a freely competitive market.

It would be slightly cynical to say that they collude to fix prices. They
can achieve their ends without conspiracy by "signalling".  An unmatched
price increase can result in loss of market share (to the extent that
consumers are not actually locked into products), so, by a step here and a
step there, the "competitors" learn what will fly and what won't.  The
word fly is used purposefully, since airline pricing was in the past often
advanced as a familiar example of such "competition".

Karl Kocher