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Tacit Collusion under Imperfect Monitoring in the Canadian Manufacturing Industry: An Empirical Study

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  • Marcelo Resende
  • Rodrigo M. Zeidan

Abstract

The paper undertakes a cross-sectoral analysis of a salient empirical implication of the model of tacit collusion advanced by Abreu et al (1986). Specifically, the prevalence of a first order Markovian process for alternating between price wars and collusive periods is assessed by means of non-parametric tests. The analysis focuses on 30 different industries in Canada. The evidence provides weak support for optimal collusion in one industry, which is consistent with the idea that such collusive arrangements are unusual.

Suggested Citation

  • Marcelo Resende & Rodrigo M. Zeidan, 2011. "Tacit Collusion under Imperfect Monitoring in the Canadian Manufacturing Industry: An Empirical Study," CESifo Working Paper Series 3623, CESifo.
    • Handle: RePEc:ces:ceswps:_3623
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp3623.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    tacit collusion; game theory; Canada; price war;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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