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Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

Joseph E. Harrington and Andrzej Skrzypacz

Economics Working Paper Archive from The Johns Hopkins University,Department of Economics

Abstract: Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements used in a number of markets including citric acid, lysine, and vitamins.

Date: 2009-08
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Journal Article: Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices (2011) Downloads
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