Information exchange in cartels

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
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Sprache:eng
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Competitors
Information sharing
Price cuts
Prices
Sales
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Krishna, Vijay
description 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.
doi_str_mv 10.1111/1756-2171.12320
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source Jstor Complete Legacy; Wiley Online Library Journals Frontfile Complete; EBSCOhost Business Source Complete
subjects Competitors
Information sharing
Price cuts
Prices
Sales
title Information exchange in cartels
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