Information Exchange in Cartels

Antitrust authorities view the exchange of information among firms regarding costs, prices or sales as anti-competitive. 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 (1964) 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.

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Work Title Information Exchange in Cartels
Access
Open Access
Creators
  1. Yu Awaya
  2. Vijay Krishna
Keyword
  1. Cartels, collusion, information
License Public Domain Mark 1.0
Work Type Article
Publication Date 2020
Deposited April 11, 2021

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Version 1
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  • Created
  • Added Creator Vijay Krishna
  • Added Creator Yu Awaya
  • Added Awaya and Krishna RJE (2020).pdf
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    • http://creativecommons.org/publicdomain/mark/1.0/
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Version 2
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  • Created
  • Updated Creator Yu Awaya
  • Updated Creator Vijay Krishna
  • Published
  • Updated