Date of this Version
The RAND Journal of Economic
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.
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].
Harrington, J. E., & Skrzypacz, A. (2007). Collusion Under Monitoring of Sales. The RAND Journal of Economic, 38 (2), 314-331. http://dx.doi.org/10.1111/j.1756-2171.2007.tb00070.x
Date Posted: 27 November 2017
This document has been peer reviewed.