| Abstract: | This paper analyzes the competitive significance of advance price announcements. In the model, advance price announcements are used by firms to communicate private information on demand or cost. By so sharing the information, the firms are able to set their prices at more profitable levels. When the advance price announcements resolve demand uncertainty, profits rise and consumer surplus falls. Interestingly, when the advance price announcements resolve cost uncertainty, both profits and consumer welfare rise. Finally, we examine U.S. antitrust policy regarding price announcements. |
