Fine cartels

David K. Levine ()
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David K. Levine: EUI and WUSTL

Economic Theory Bulletin, 2021, vol. 9, issue 2, No 1, 155-166

Abstract: Abstract This paper studies a simple model of a repeated cartel that can punish using both voluntary fines and inefficient prices wars. The idea is to use the fines in response to noisy signals of bad behavior and back it up with threats of price wars in response to the easily observed failure to pay the voluntary fines. The model is shown to deliver the insights of modern repeated game theory in an empirically accurate and tractable form.

Keywords: Cartels; Monopoly; Repeated games; Fines; Price wars; Game theory; Industrial organization (search for similar items in EconPapers)
JEL-codes: A1 D7 D9 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s40505-021-00205-z

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