Information exchange in cartels

Yu Awaya, Vijay Krishna

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

Antitrust authorities view the exchange of information among firms regarding costs, prices, or sales as anticompetitive. 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 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.

Original languageEnglish (US)
Pages (from-to)421-446
Number of pages26
JournalRAND Journal of Economics
Volume51
Issue number2
DOIs
StatePublished - Jun 1 2020

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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