Price conspiracies appear endemic in many markets. This paper conjectures that low expected returns from product innovation can affect price collusion in certain markets. This conjecture is tested—and supported—by both archival and experimental data. In particular, average market prices in low innovation experiments are significantly greater than those in high innovation, but otherwise identical experiments, because price collusion is more successful in the low innovation experiments.
Smyth, A. (2017). How product innovation can affect price collusion. ESI Working Paper 17-26. Retrieved from https://digitalcommons.chapman.edu/esi_working_papers/239