Date of this Version
American Economic Review
Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements in a number of markets including citric acid, lysine, and vitamins.
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Harrington, J. E., & Skrzypacz, A. (2011). Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices. American Economic Review, 101 (6), 2425-2449. http://dx.doi.org/10.1257/aer.101.6.2425
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Date Posted:08 September 2018
This document has been peer reviewed.