Garrod, Luke and Olczak, Matthew (2018). Explicit vs Tacit Collusion:The Effects of Firm Numbers and Asymmetries. International Journal of Industrial Organization, 56 , pp. 1-25.
Abstract
In an infinitely repeated game where firms with (possibly asymmetric) capacity constraints can make secret price cuts, we analyse the incentives for explicit collusion when firms can alternatively collude tacitly. Tacit collusion can involve price wars on the equilibrium path. Explicit collusion involves firms secretly sharing their private information to avoid such price wars, but this is illegal and runs the risk of sanctions. We find that, in contrast to the conventional wisdom but consistent with some empirical evidence, illegal cartels are least likely to arise in markets with a few symmetric firms, because tacit collusion is relatively more appealing in such markets. We discuss the implications for anti-cartel enforcement policy.
Publication DOI: | https://doi.org/10.1016/j.ijindorg.2017.10.006 |
---|---|
Divisions: | College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship |
Additional Information: | © 2017, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ |
Uncontrolled Keywords: | Cartels,Tacit collusion,Imperfect monitoring,Capacity constraints |
Publication ISSN: | 0167-7187 |
Last Modified: | 14 Nov 2024 08:07 |
Date Deposited: | 14 Nov 2017 09:40 |
Full Text Link: | |
Related URLs: |
http://linkingh ... 167718717300267
(Publisher URL) |
PURE Output Type: | Article |
Published Date: | 2018-01-01 |
Published Online Date: | 2017-11-11 |
Accepted Date: | 2017-10-24 |
Authors: |
Garrod, Luke
Olczak, Matthew ( 0000-0001-6808-3832) |
Download
Version: Accepted Version
License: Creative Commons Attribution Non-commercial No Derivatives
| Preview