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Question - LG and Hewlett-Packard are two firms in the market for computer monitors. Suppose each firm generally announces its prices by sending price lists to customers 60 days in advance of the effective date. Other manufacturers of computer monitors, such as Acer and Dell, are able to observe these price announcements.
(a) How does this business practice of price preannouncements differ from a pre-commitment strategy? Explain.
(b) What might managers of LG and Hewlett-packard hope to achieve with these price preannouncements?
(c) Do price preannouncements have the potential to enable explicit or tacit collusion? Explain.
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