Publication Type

Journal Article

Publication Date

3-2010

Abstract

In this paper, two firms play an infinitely-repeated Bertrand game, and each firm has an agent who produces the firm's output and holds private information about production costs. The colluding firms fix prices and allocate market shares based on their agents' information. We develop a model of collusion in which firms use the presence of agents as a strategic opportunity to restrict their incentives to distort private information. We show that such firm behavior may expand the scope of optimal collusion whether market-allocation schemes are asymmetric or symmetric.

Keywords

Information distortion, Internal contract, Price-fixing collusion, Private information

Discipline

Econometrics

Research Areas

Financial Economics

Publication

Games and Economic Behavior

Volume

68

Issue

2

First Page

646-669

ISSN

0899-8256

Identifier

10.1016/j.geb.2009.08.005

Additional URL

http://dx.doi.org/10.1016/j.geb.2009.08.005

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