Sellers' Implicit Collusion in Directed Search Markets

Seungjin Han

Department of Economics Working Papers from McMaster University

Abstract: This paper studies a competing-mechanism game for directed search markets in which multiple sellers simultaneously offer selling mechanisms to multiple buyers to compete for trading opportunities and profits. Buyers approach any particular seller via directed search but there can be mis-coordination among buyers in the sense that they choose all the sellers offering the same mechanism with equal probability. A seller's mechanism can be sufficiently general to make his trading price contingent on participating buyers' messages, which may reflect changes in trading prices somewhere else. This allows sellers to sustain implicit collusion. This paper focuses on symmetric equilibria in which sellers offer the same ex-post incentive compatible mechanism. It provides the characterization of all symmetric ex-post equilibrium allocations and comparative statics regarding the range of equilibrium prices and profits. In a large market, the probability that sellers can sell their products at collusive prices depends on the ratio of buyers to sellers.

Keywords: online markets; clickstream; implicit collusion; competing mechanisms; robust equilibrium (search for similar items in EconPapers)
JEL-codes: C71 D82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-04, Revised 2016-05
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2014-05.pdf (application/pdf)

Related works:
Journal Article: Sellers’ Implicit Collusion in Directed Search Markets (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2014-05

Access Statistics for this paper

More papers in Department of Economics Working Papers from McMaster University Contact information at EDIRC.
Bibliographic data for series maintained by ().