Collusion Between Supply Chains under Asymmetric Information

This paper considers an infinitely repeated competition between manufacturer‐retailer supply chains. In every period, retailers privately observe the demand and manufacturers pay retailers ‘information rents’. I study collusive equilibria between the supply chains that may or may not involve the retailers. I find that including forward‐looking retailers in the collusive scheme may facilitate or hinder collusion, depending on the likelihood of a high demand and the gap between a high and a low demand. Moreover, collusion on monopoly profits can be easier or more difficult to implement than collusion on upstream profits.