Optimal Collusion with Private Information Export

@article{citeulike:1761872, abstract = {We analyze collusion in an infinitely repeated Bertrand game, where prices are publicly observed and each firm receives a privately observed, i. i.d. cost shock in each period. Productive efficiency is possible only if high-cost firms relinquish market share. In the most profitable collusive schemes, firms implement productive efficiency, and high-cost firms are favored with higher expected market share in future periods. If types are discrete, there exists a discount factor strictly less than one above which first-best profits can be attained using history-dependent reallocation of market share between equally efficient firms. We also analyze the role of communication and side-payments.}, author = {Athey, Susan and Bagwell, Kyle}, citeulike-article-id = {1761872}, citeulike-linkout-0 = {http://www.jstor.org/stable/2696363}, journal = {The RAND Journal of Economics}, keywords = {450-1, collusion}, number = {3}, pages = {428--465}, posted-at = {2007-10-12 21:55:55}, priority = {2}, title = {Optimal Collusion with Private Information}, url = {http://www.jstor.org/stable/2696363}, volume = {32}, year = {2001} }

TY - JOUR ID - citeulike:1761872 L3 - citeulike-article-id:1761872 N2 - We analyze collusion in an infinitely repeated Bertrand game, where prices are publicly observed and each firm receives a privately observed, i. i.d. cost shock in each period. Productive efficiency is possible only if high-cost firms relinquish market share. In the most profitable collusive schemes, firms implement productive efficiency, and high-cost firms are favored with higher expected market share in future periods. If types are discrete, there exists a discount factor strictly less than one above which first-best profits can be attained using history-dependent reallocation of market share between equally efficient firms. We also analyze the role of communication and side-payments. IS - 3 JF - The RAND Journal of Economics EP - 465 TI - Optimal Collusion with Private Information VL - 32 SP - 428 KW - 450-1 KW - collusion AU - Athey, Susan AU - Bagwell, Kyle PY - 2001/// UR - http://www.jstor.org/stable/2696363 ER -