EconPapers    
Economics at your fingertips  
 

Collusion Under Asymmetric Information: The Role of the Correlation

Jerome Pouyet

Journal of Public Economic Theory, 2002, vol. 4, issue 4, 543-572

Abstract: We consider the regulation of a duopoly under incomplete information. When firms act noncooperatively, the regulator uses yardstick mechanisms to bridge his informational gap at no cost. However, this provides the firms with an incentive to collude. We interpret the correlation as a measure of the congruence/divergence between individual and coalitional incentives. Under positive correlation, these incentives are aligned: the threat of collusion forces the regulator to distort the allocation. Under negative correlation, these incentives are opposed: the regulator can, sometimes, exploit this conflict of interest inside the coalition to eradicate the stakes of collusion at no cost.

Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/1097-3923.00109

Related works:
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:bla:jpbect:v:4:y:2002:i:4:p:543-572

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-10-17
Handle: RePEc:bla:jpbect:v:4:y:2002:i:4:p:543-572