Collusion under Monitoring of Sales

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Collusion under Monitoring of Sales

Author Info

Skrzypacz, Andrzej (Stanford U)
Harrington, Joseph E. (Johns Hopkins U)

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Andrzej Skrzypacz

Abstract

Collusion under imperfect monitoring is explored when firms' prices are private information and their quantities are public information; an information structure consistent with several recent price-fixing cartels such as those in lysine and vitamins. For a class of symmetric duopoly games, it is shown that symmetric equilibrium punishments cannot sustain any collusion. An asymmetric punishment is characterized which does sustain collusion and it has the firm with sales exceeding its quota compensating the firm with sales below its quota. In practice, cartels have performed such transfers through sales among the cartel members.

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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number 1885.

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Date of creation: Mar 2005
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Handle: RePEc:ecl:stabus:1885

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Paper
- 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!]

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.:

Joseph E Harrington, 2001. "Optimal Cartel Pricing in the Presence of an Antitrust Authority," Economics Working Paper Archive 460, The Johns Hopkins University,Department of Economics, revised Jul 2002. [Downloadable!]
Other versions:
- Joseph E. Harrington, 2005. "Optimal Cartel Pricing In The Presence Of An Antitrust Authority," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 145-169, 02. [Downloadable!] (restricted)
Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June. [Downloadable!] (restricted)
Joseph E. Harrington, Jr., 2004. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 651-673, Winter.
Other versions:
- Joseph E Harrington Jr, 2002. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," Economics Working Paper Archive 487, The Johns Hopkins University,Department of Economics, revised May 2003. [Downloadable!]
- Joseph E. Harrington, Jr., 2003. "Cartel Pricing Dynamics in the Presence of an Antitrust Authority," Computing in Economics and Finance 2003 26, Society for Computational Economics.
Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June. [Downloadable!] (restricted)
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)
Kyle Bagwell & Asher Wolinsky, 2002. "Game theory and industrial organization," Discussion Papers 0102-36, Columbia University, Department of Economics. [Downloadable!]
Other versions:
- Kyle Bagwell & Asher Wolinsky, 2000. "Game Theory and Industrial Organization," Discussion Papers 1307, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
- Bagwell, K. & Wolinsky, A., 2000. "Game Theory and Industrial Organization," Discussion Papers 2000_01, Columbia University, Department of Economics.
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Skrzypacz, Andrzej & Harrington, Joseph E., 2005. "Collusion under Monitoring of Sales," Research Papers 1885, Stanford University, Graduate School of Business. [Downloadable!]
Other versions:
- 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!]
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:
- Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
Cabral, Luis M B & Riordan, Michael H, 1994. "The Learning Curve, Market Dominance, and Predatory Pricing," Econometrica, Econometric Society, vol. 62(5), pages 1115-40, September. [Downloadable!] (restricted)
Other versions:
- Cabral, L. & Riordan, M., 1992. "The Learning Curve, Market Dominance and Predatory Pricing," Papers 39, Boston University - Industry Studies Programme.
- Luis M.B. Cabral & Michael Riordan, 1992. "The Learning Curve, Market Dominance and Predatory Pricing," Papers 0039, Boston University - Industry Studies Programme.
Joseph E Harrington Jr & Joe Chen, 2002. "Cartel Pricing Dynamics with Cost Variability and Endogenous Buyer Detection," Economics Working Paper Archive 514, The Johns Hopkins University,Department of Economics, revised Sep 2004. [Downloadable!]
Other versions:
- Joseph E. Harrington, Jr. & Joe Chen, 2005. "Cartel Pricing Dynamics with Cost Variability and Endogenous Buyer Detection," CIRJE F-Series CIRJE-F-359, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
- Harrington, Joseph Jr. & Chen, Joe, 2006. "Cartel pricing dynamics with cost variability and endogenous buyer detection," International Journal of Industrial Organization, Elsevier, vol. 24(6), pages 1185-1212, November. [Downloadable!] (restricted)
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:
- Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001. "Tacit Collusion in Repeated Auctions," Research Papers 1698r2, Stanford University, Graduate School of Business. [Downloadable!]

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.)

Luís Cabral, 2005. "Collusion Theory: Where to Go Next?," Journal of Industry, Competition and Trade, Springer, vol. 5(3), pages 199-206, December. [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:
- Skrzypacz, Andrzej & Harrington, Joseph E., 2005. "Collusion under Monitoring of Sales," Research Papers 1885, Stanford University, Graduate School of Business. [Downloadable!]
Skrzypacz, Andrzej & Sannikov, Yuliy, 2005. "Impossibility of Collusion under Imperfect Monitoring with Flexible Production," Research Papers 1887, Stanford University, Graduate School of Business. [Downloadable!]
Other versions:
- Yuliy Sannikov & Andrzej Skrzypacz, 2004. "Impossibility of Collusion under Imperfect Monitoring with Flexible Production," 2004 Meeting Papers 418, Society for Economic Dynamics.
- Yuliy Sannikov & Andrzej Skrzypacz, 2007. "Impossibility of Collusion under Imperfect Monitoring with Flexible Production," American Economic Review, American Economic Association, vol. 97(5), pages 1794-1823, December. [Downloadable!]
Scholz, Julia, 2008. "Auswirkungen vertikaler Kollusionsprobleme auf die vertragliche Ausgestaltung von Kreditverkäufen," Discussion Papers in Business Administration 4581, University of Munich, Munich School of Management. [Downloadable!]
Joseph E. Harrington, Jr, 2006. "How Do Cartels Operate?," Economics Working Paper Archive 531, The Johns Hopkins University,Department of Economics. [Downloadable!]

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