Chinese smarter than Americans?

In my previous post about Kraft’s pricing strategy I showed why Kraft signalling a price increase is a smart move. By signalling an increase they send a message to their competitors that they can increase their prices too and they can all benefit, but they don’t breach competition laws.

Unilever tried the same thing in China when they announced that they would be raising prices in the future (story here). In response to this the Chinese authorities have fined Unilever $308,000 for creating panic buying in the market.

Looks like the Chinese authorities have a better understanding of game theory than the American ones. It just goes to show that any attempts to communicate information to escape from the pricing prisoners’ dilemma needs to be very subtle to avoid regulators taking action.

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