On Communication and Collusion

We study the role of communication within a cartel. Our analysis is carried out in Stigler’s (1964) model of repeated oligopoly with secret price cuts. Firms observe neither the prices nor the sales of their rivals. For a fixed discount factor, we identify conditions under which there are equilibria with “cheap talk” that result in near-perfect collusion, whereas all equilibria without such communication are bounded away from this outcome. In our model, communication improves monitoring and leads to higher prices and profits.

Files

Metadata

Work Title On Communication and Collusion
Access
Open Access
Creators
  1. Yu Awaya
  2. Vijay Krishna
License CC BY-NC 4.0 (Attribution-NonCommercial)
Work Type Article
Publisher
  1. American Economic Review
Publication Date 2016
Publisher Identifier (DOI)
  1. http://dx.doi.org/10.1257/aer.20141469
Deposited August 02, 2021

Versions

Analytics

Collections

This resource is currently not in any collection.

Work History

Version 1
published

  • Created
  • Added Creator Yu Awaya
  • Added Creator Vijay Krishna
  • Added Awaya and Krishna AER (2016).pdf
  • Updated License Show Changes
    License
    • http://creativecommons.org/publicdomain/mark/1.0/
  • Published
  • Updated
  • Updated

Version 2
published

  • Created
  • Updated Publisher Show Changes
    Publisher
    • American Economic Review
  • Updated License Show Changes
    License
    • http://creativecommons.org/publicdomain/mark/1.0/
    • https://creativecommons.org/licenses/by-nc/4.0/
  • Published
  • Updated
  • Updated Publisher Identifier (DOI) Show Changes
    Publisher Identifier (DOI)
    • http://dx.doi.org/10.1257/aer.20141469