Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices
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Business
Business Administration, Management, and Operations
Business Intelligence
Economics
Organizational Behavior and Theory
Public Affairs, Public Policy and Public Administration
Business Administration, Management, and Operations
Business Intelligence
Economics
Organizational Behavior and Theory
Public Affairs, Public Policy and Public Administration
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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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2011-10-01
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American Economic Review