Cheating and compensation in price-fixing cartels

• 成果类型: Article
• 署名作者: Do, Jihwan
• 署名单位: Wuhan University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2021.105382
• 发表日期: 2022
• 关键词: Collusion; oligopoly; Repeated game; Price-cutting; Compensation scheme

摘要

This paper provides a theoretical explanation of cheating and compensation on-path of play using a canonical repeated game model of price-fixing collusion. The novel mechanism relies on firms playing mixed strategies allowing for both the monopoly price and undercutting the monopoly price to happen with positive probability, together with a compensation scheme that punishes a price-cutter. For an intermediate range of discount factors, the mechanism is optimal in a restricted class of equilibria, and such price-cutting and compensation are necessary parts for any symmetric collusive equilibrium. (c) 2021 Elsevier Inc. All rights reserved.