Collusion under Monitoring of Sales
Joseph Harrington () and
Economics Working Paper Archive from The Johns Hopkins University,Department of Economics
Collusion under imperfect monitoring is explored when firms?prices are private information and their quantities are public information; an information structure consistent with several recent price-fixing cartels such as those in lysine and vitamins. For a class of symmetric duopoly games, it is shown that symmetric equilibrium punishments cannot sustain any collusion. An asymmetric punishment is characterized which does sustain collusion and it has the firm with sales exceeding its quota compensating the firm with sales below its quota. In practice, cartels have performed such transfers through sales among the cartel members.
Date: 2004-06, Revised 2005-03
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Journal Article: Collusion under monitoring of sales (2007)
Working Paper: Collusion under Monitoring of Sales (2005)
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