Explicit Collusion under Antitrust Enforcement

Igor Mouraviev ()

No 494, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: The article seeks to fiÂ…ll the gap between tacit and explicit collusion in a setting where fiÂ…rms observe only their own output levels and a common price, which includes a stochastic component. Without communication, Â…firms fail to discriminate between random shocks and marginal deviations, which constrains the scope for collusion. By eliminating uncertainty about what has happened, communication facilitates detection of deviations but reduces collusive proÂ…fits due to the risk of exposure to legal sanctions. With the optimal collusive strategy, Â…firms communicate only if the market price falls somewhat below the trigger price. Moreover, they tend to communicate more often as they become less patient, a cartel grows in size, or demand uncertainty rises.

Keywords: Imperfect Monitoring; Communication; Frequency ofMeetings.; Collusion (search for similar items in EconPapers)
Pages: 49
Date: 2014-05-08
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-ind and nep-law
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Citations: View citations in EconPapers (9)

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https://pub.uni-bielefeld.de/download/2675305/2901862 First Version, 2013 (application/x-download)

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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:494

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