Cartel Sales Dynamics when Monitoring for Compliance is More Frequent than Punishment for Non-Compliance

Joseph E. Harrington and Juan-Pablo Montero

Chapter 7 in The Analysis of Competition Policy and Sectoral Regulation, 2014, pp 175-192 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This study investigates when a cartel that uses a sales quota allocation scheme monitors more frequently than it enforces; for example, monitoring of sales is done on a weekly basis but firms are only required to comply with sales quotas on a quarterly basis. In a simple three-period quantity game with i.i.d cost and demand shocks, we show that the volatility of a cartel member's sales follows a U-shape within the compliance horizon. In comparison, sales volatility is constant over time under competition. This result offers a simple empirical test for distinguishing collusion from competition using sales data.

Keywords: Competition Policy; Sectoral Regulation; Pattern Asymmetry; Market Consolidation; Grocery Retailing; Pricing Developments; Industry Structure; Price Effects of Mergers; Input Price Shocks; Quantity Discounts (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789814616362_0007 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789814616362_0007 (text/html)
Ebook Access is available upon purchase.

Related works:
Working Paper: Cartel Sales Dynamics when Monitoring for Compliance is More Frequent than Punishment for Non-Compliance (2013)
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:wsi:wschap:9789814616362_0007

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().