Collusion with Internal Contracting
In this paper, an infinitely-repeated Bertrand game is considered. The model has a two-tier relationship; two firms make a self-enforced collusive agreement and each firm writes a law-enforced contract to its privately-informed agent. The main finding is that in optimal collusion, interaction between intra-firm (internal) contracting and inter-firm collusion may be exploited; inter-firm collusion may enhance the efficiency of internal contract, and conversely, internal contracting may facilitate collusion
Price-fixing collusion; Private information; Internal contract; Information distortion
Dispute Resolution and Arbitration | International Business
Games and Economic Behavior
Lee, Gea Myoung.
Collusion with Internal Contracting. (2004). Games and Economic Behavior. 68, (2), 646-669. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/829
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