Information exchange in cartels

Antitrust authorities view the exchange of information among firms regarding costs, prices, or sales as anticompetitive. Such exchanges allow competitors to closely monitor each other, thereby facilitating collusion. But the exchange of aggregate information, perhaps via a third party, is legal. The...

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Veröffentlicht in:The Rand journal of economics 2020-07, Vol.51 (2), p.421-446
Hauptverfasser: Awaya, Yu, Krishna, Vijay
Format: Artikel
Sprache:eng
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Zusammenfassung:Antitrust authorities view the exchange of information among firms regarding costs, prices, or sales as anticompetitive. Such exchanges allow competitors to closely monitor each other, thereby facilitating collusion. But the exchange of aggregate information, perhaps via a third party, is legal. The logic is that collusion is difficult if the identity of a price-cutting firm cannot be ascertained. Here, we examine this logic using Stigler's model of secret price cuts. We first identify circumstances such that when no information exchange is possible, collusion is difficult. We then show that if firms' aggregate sales are made public, nearly perfect collusion is possible.
ISSN:0741-6261
1756-2171
DOI:10.1111/1756-2171.12320