Business Economics and Public Policy Papers

Document Type

Journal Article

Date of this Version

6-2007

Publication Source

The RAND Journal of Economic

Volume

38

Issue

2

Start Page

314

Last Page

331

DOI

10.1111/j.1756-2171.2007.tb00070.x

Abstract

Collusion under imperfect monitoring is explored when firms' prices are private information and their quantities are public information; such an information structure is consistent with several recent price-fixing cartels, such as those in lysine and vitamins. For a class of symmetric oligopoly games, it is shown that symmetric equilibrium punishments cannot sustain any collusion. An asymmetric punishment is characterized that does sustain collusion and it has firms whose sales exceed their quotas compensating those firms with sales below their quotas. In practice, cartels could have performed such transfers through sales among the cartel members.

Copyright/Permission Statement

This is the peer reviewed version of the following article: Harrington, J. E. and Skrzypacz, A. (2007), Collusion under monitoring of sales. The RAND Journal of Economics, 38: 314–331. doi:10.1111/j.1756-2171.2007.tb00070.x, which has been published in final form at http://dx.doi.org/10.1111/j.1756-2171.2007.tb00070.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms].

Comments

At the time of publication, author Joseph E. Harrington Jr. was affiliated with the John Hopkins University . Currently, he is a faculty member in the Business, Economics and Public Policy Department of the Wharton School at the University of Pennsylvania.

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Date Posted: 27 November 2017

This document has been peer reviewed.