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  4. October 2011
  5. Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

  • Joseph E. Harrington
  • Andrzej Skrzypacz
American Economic Review
vol. 101, no. 6, October 2011
(pp. 2425–49)
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Abstract

Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements in a number of markets including citric acid, lysine, and vitamins. (JEL D43, D82, K21, L12, L61, L65)

Citation

Harrington, Joseph E., and Andrzej Skrzypacz. 2011. "Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices." American Economic Review, 101 (6): 2425–49. DOI: 10.1257/aer.101.6.2425

Additional Materials

JEL Classification

  • D43 Market Structure and Pricing: Oligopoly and Other Forms of Market Imperfection
  • D82 Asymmetric and Private Information
  • K21 Antitrust Law
  • L12 Monopoly; Monopolization Strategies
  • L61 Metals and Metal Products; Cement; Glass; Ceramics
  • L65 Chemicals; Rubber; Drugs; Biotechnology