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Optimal collusion under imperfect monitoring in multimarket contact

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  • Kobayashi, Hajime
  • Ohta, Katsunori

Abstract

We investigate optimal collusion in repeated multimarket contact under imperfect public monitoring, where two firms operate in m markets and in each market, each firmʼs decision and public signals are binary. We show that in an optimal pure strategy strongly symmetric perfect public equilibrium, the size of efficiency loss is equal to that in the market with the most tempting deviation under single-market contact. Furthermore, we show a sufficient condition under which the symmetric equilibrium is optimal for joint payoff maximization among any perfect public equilibrium.

Suggested Citation

  • Kobayashi, Hajime & Ohta, Katsunori, 2012. "Optimal collusion under imperfect monitoring in multimarket contact," Games and Economic Behavior, Elsevier, vol. 76(2), pages 636-647.
    • Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:636-647
    DOI: 10.1016/j.geb.2012.08.003
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    Cited by:

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    3. Tadashi Sekiguchi, 2015. "Multimarket contact under demand fluctuations," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(4), pages 1033-1048, November.
    4. Mitsuru Igami & Takuo Sugaya, 2022. "Measuring the Incentive to Collude: The Vitamin Cartels, 1990–99," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(3), pages 1460-1494.
    5. Tadashi Sekiguchi, 2013. "Multimarket Contact Under Demand Fluctuations: A Limit Result," Working Papers e052, Tokyo Center for Economic Research.

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    More about this item

    Keywords

    Multimarket contact; Infinitely repeated games; Imperfect public monitoring;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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