Collusive Market Allocations

Elisabetta Iossa, Simon Loertscher, Leslie Marx and Patrick Rey

No 14563, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Collusive schemes by suppliers often take the form of allocating customers or markets among cartel members. We analyze incentives for suppliers to initiate and sustain such a collusive schemes in a repeated procurement setting. We show that, contrary to some prevailing beliefs, staggered (versus synchronized) purchasing does not make collusion more difficult to sustain or initiate. Buyer defensive measures include synchronized rather than staggered purchasing, first-price rather than second-price auctions, more aggressive or secrete reserve prices, longer contract lengths, withholding information, and avoiding observable registration procedures. Inefficiency induced by defensive measures is an often unrecognized social cost of collusive conduct.

Keywords: Synchronized vs staggered purchasing; Sustainability and initiation of collusion; Coordinated effects (search for similar items in EconPapers)
JEL-codes: D44 D82 L41 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-com, nep-cta, nep-exp, nep-gth and nep-mic
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