Intermediaries, Credibility and Incentives to Collude

Eloïc Peyrache () and Lucía Quesada
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Eloïc Peyrache: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

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Abstract: A seller contracts and potentially colludes with a certification intermediary. We investigate the intermediary's incentives to collude, her pricing strategy, and the extent to which buyers rely on the intermediary's announcements. The probability of collusion is an endogenous variable, determined by the intermediary's pricing strategy. The extent to which the market relies on the intermediary's reports, the certification price and the intermediary's profit decrease as the intermediary becomes less patient. By making certification mandatory, the intermediary loses her ability to screen out low-quality sellers, which increases the probability of collusion.

Keywords: intermediaries; incentives in industry; price fixing; market pricing (search for similar items in EconPapers)
Date: 2011-12
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Citations: View citations in EconPapers (12)

Published in Journal of Economics and Management Strategy, 2011, 20 (4), pp.1099-1133. ⟨10.1111/j.1530-9134.2011.00317.x⟩

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Journal Article: Intermediaries, Credibility and Incentives to Collude (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00637997

DOI: 10.1111/j.1530-9134.2011.00317.x

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