Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices
Joseph E. Harrington, Andrzej Skrzypacz
American Economic Review · 2011 · Volume 101 · Issue 6
Abstract
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. (JEL D43, D82, K21, L12, L61, L65)
Keywords
Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection, Asymmetric and Private Information, Antitrust Law, Monopoly, Monopolization Strategies, Metals and Metal Products, Cement, Glass, Ceramics, Chemicals, Rubber, Drugs, Biotechnology
Enable JavaScript for citation tools and additional paper interactions.