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Explicit Collusion Under Antitrust Enforcement

Igor Mouraviev
2013 Social Science Research Network  
The article seeks to ...ll the gap between tacit and explicit collusion in a setting where ...rms observe only their own output levels and a common price, which includes a stochastic component. Without communication, ...rms fail to discriminate between random shocks and marginal deviations, which constrains the scope for collusion. By eliminating uncertainty about what has happened, communication facilitates detection of deviations but reduces collusive pro...ts due to the risk of exposure to
more » ... sk of exposure to legal sanctions. With the optimal collusive strategy, ...rms communicate only if the market price falls somewhat below the trigger price. Moreover, they tend to communicate more often as they become less patient, a cartel grows in size, or demand uncertainty rises.
doi:10.2139/ssrn.2366455 fatcat:jxixpzofxjdvhmnnlrpy3akmay