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Impossibility of Collusion under Imperfect Monitoring with Flexible Production Author info | Abstract | Publisher info | Download info | Related research | Statistics Skrzypacz, Andrzej (Stanford U)
Sannikov, Yuliy (U of California, Berkeley)
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We show that it is impossible to achieve collusion in a duopoly when (1) goods are homogenous and firms compete in quantities, (2) new, imperfect information arrives continuously, without sudden events and (3) firms are able to respond to this new information quickly. The result holds even if we allow for asymmetric equilibria or monetary transfers. The intuition is that the flexibility to respond to new information quickly unravels any collusive scheme and that signals about the aggregate behavior only cannot be used effectively to provide individual incentives via transfers. Our result applies both to a simple stationary model and a more complicated one with prices following a mean-reverting Markov process.
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Paper provided by Stanford University, Graduate School of Business in its series Research Papers with number
1887.
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Date of creation: May 2005Date of revision:
Handle: RePEc:ecl:stabus:1887Contact details of provider: Postal: Stanford University, Stanford, CA 94305-5015 Phone: (650) 723-2146 Fax: (650)725-6750 Email: Web page: http://gsbapps.stanford.edu/researchpapers/ More information through EDIRC
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986.
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Other versions:
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[Downloadable!] (restricted) Abreu, Dilip & Milgrom, Paul & Pearce, David, 1991.
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Other versions:
Abreu, D. & Milgrom, P. & Pearce, D., 1990.
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Joseph E Harrington & Jr Andrzej Skrzypacz, 2004.
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Economics Working Paper Archive
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[Downloadable!]
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Drew Fudenberg & David K. Levine & Eric Maskin, 1994.
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Levine's Working Paper Archive
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Other versions:
Drew Fudenberg & David K. Levine & Eric Maskin, 1994.
"The Folk Theorem with Imperfect Public Information ,"
Levine's Working Paper Archive
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[Downloadable!] Fudenberg, D. & Levine, D.K. & Maskin, E., 1989.
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[Downloadable!] (restricted) Green, Edward J & Porter, Robert H, 1984.
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Econometrica ,
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[Downloadable!] (restricted)
Other versions: Skrzypacz, Andrzej & Hopenhayn, Hugo, 2004.
"Tacit collusion in repeated auctions ,"
Journal of Economic Theory ,
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Other versions: Hay, George A & Kelley, Daniel, 1974.
"An Empirical Survey of Price Fixing Conspiracies ,"
Journal of Law & Economics ,
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Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Osório-Costa, António M., 2009.
"Frequent Monitoring in Repeated Games under Brownian Uncertainty ,"
MPRA Paper
13104, University Library of Munich, Germany.
[Downloadable!]
Drew Fudenberg & David K Levine, 2007.
"Repeated Games with Frequent Signals ,"
Levine's Working Paper Archive
814577000000000009, David K. Levine.
[Downloadable!]
David A. Miller, 2005.
"The dynamic cost of ex post incentive compatibility in repeated games of private information ,"
Game Theory and Information
0510002, EconWPA.
[Downloadable!]
Drew Fudenberg & David K Levine, 2007.
"Continuous Time Limits of Repeated Games with Imperfect Public Monitoring ,"
Levine's Working Paper Archive
699152000000000028, David K. Levine.
[Downloadable!]
Other versions: Osório-Costa, António M., 2009.
"Efficiency Gains in Repeated Games at Random Moments in Time ,"
MPRA Paper
13105, University Library of Munich, Germany, revised 03 Feb 2009.
[Downloadable!]
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