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Impossibility of Collusion under Imperfect Monitoring with Flexible Production Author info | Abstract | Publisher info | Download info | Related research | Statistics Yuliy Sannikov
Andrzej Skrzypacz
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We show that it is impossible to achieve collusion in a duopoly when (a) goods are homogenous and firms compete in quantities; (b) new, noisy information arrives continuously, without sudden events; and (c) firms are able to respond to new information quickly. The result holds even if we allow for asymmetric equilibria or monetary transfers. The intuition is that the flexibility to respond quickly to new information unravels any collusive scheme. Our result applies to both a simple stationary model and a more complicated one, with prices following a mean-reverting Markov process, as well as to models of dynamic cooperation in many other settings. (JEL D43, L12, L13)
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Article provided by American Economic Association in its journal American Economic Review .
Volume (Year): 97 (2007)
Issue (Month): 5 (December)
Pages: 1794-1823
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986.
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[Downloadable!] (restricted)
Athey, Susan & Bagwell, Kyle, 2001.
"Optimal Collusion with Private Information ,"
RAND Journal of Economics ,
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Other versions:
Susan Athey & Kyle Bagwell & Chris Sanchirico, 2002.
"Collusion and price rigidity ,"
Discussion Papers
0102-38, Columbia University, Department of Economics.
[Downloadable!] Kyle Bagwell, 2004.
"Collusion and Price Rigidity ,"
Theory workshop papers
658612000000000081, UCLA Department of Economics.
[Downloadable!] Susan Athey & Kyle Bagwell & Chris Sanchirico, 2004.
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[Downloadable!] (restricted) Abreu, Dilip & Milgrom, Paul & Pearce, David, 1991.
"Information and Timing in Repeated Partnerships ,"
Econometrica ,
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[Downloadable!] (restricted)
Other versions:
Abreu, D. & Milgrom, P. & Pearce, D., 1990.
"Information And Timing In Repeated Partnerships ,"
Papers
e-90-14, Stanford - Hoover Institution.
David G. Pearce & Dilip Abreu & Paul R. Milgrom, 1988.
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Cowles Foundation Discussion Papers
875, Cowles Foundation, Yale University.
[Downloadable!] Andreas Blume & Paul Heidhues, 2008.
"Modeling Tacit Collusion in Auctions ,"
Journal of Institutional and Theoretical Economics (JITE) ,
Mohr Siebeck, Tübingen, vol. 164(1), pages 163-184, March.
[Downloadable!] (restricted)
Joseph E Harrington & Jr Andrzej Skrzypacz, 2004.
"Collusion under Monitoring of Sales ,"
Economics Working Paper Archive
509, The Johns Hopkins University,Department of Economics, revised Mar 2005.
[Downloadable!]
Other versions: David A. Miller, 2005.
"The dynamic cost of ex post incentive compatibility in repeated games of private information ,"
Game Theory and Information
0510002, EconWPA.
[Downloadable!]
Drew Fudenberg & David K. Levine & Eric Maskin, 1994.
"The Folk Theorem with Imperfect Public Information ,"
Levine's Working Paper Archive
394, David K. Levine.
[Downloadable!]
Other versions:
Drew Fudenberg & David K. Levine & Eric Maskin, 1994.
"The Folk Theorem with Imperfect Public Information ,"
Levine's Working Paper Archive
2058, David K. Levine.
[Downloadable!] Fudenberg, D. & Levine, D.K. & Maskin, E., 1989.
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Working papers
523, Massachusetts Institute of Technology (MIT), Department of Economics.
Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994.
"The Folk Theorem with Imperfect Public Information ,"
Econometrica ,
Econometric Society, vol. 62(5), pages 997-1039, September.
[Downloadable!] (restricted) Green, Edward J & Porter, Robert H, 1984.
"Noncooperative Collusion under Imperfect Price Information ,"
Econometrica ,
Econometric Society, vol. 52(1), pages 87-100, January.
[Downloadable!] (restricted)
Other versions: Skrzypacz, Andrzej & Hopenhayn, Hugo, 2004.
"Tacit collusion in repeated auctions ,"
Journal of Economic Theory ,
Elsevier, vol. 114(1), pages 153-169, January.
[Downloadable!] (restricted)
Other versions: Hay, George A & Kelley, Daniel, 1974.
"An Empirical Survey of Price Fixing Conspiracies ,"
Journal of Law & Economics ,
University of Chicago Press, vol. 17(1), pages 13-38, April.
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
David A. Miller, 2005.
"The dynamic cost of ex post incentive compatibility in repeated games of private information ,"
Game Theory and Information
0510002, EconWPA.
[Downloadable!]
Osório-Costa, António M., 2009.
"Efficiency Gains in Repeated Games at Random Moments in Time ,"
MPRA Paper
13105, University Library of Munich, Germany, revised 03 Feb 2009.
[Downloadable!]
Drew Fudenberg & David K Levine, 2007.
"Continuous Time Limits of Repeated Games with Imperfect Public Monitoring ,"
Levine's Working Paper Archive
699152000000000028, David K. Levine.
[Downloadable!]
Other versions: Osório-Costa, António M., 2009.
"Frequent Monitoring in Repeated Games under Brownian Uncertainty ,"
MPRA Paper
13104, University Library of Munich, Germany.
[Downloadable!]
Drew Fudenberg & David K Levine, 2007.
"Repeated Games with Frequent Signals ,"
Levine's Working Paper Archive
814577000000000009, David K. Levine.
[Downloadable!]
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