Stochastic market sharing, partial communication and collusion

Gerlach, Heiko (2009) Stochastic market sharing, partial communication and collusion. International Journal of Industrial Organization, 27 6: 655-666. doi:10.1016/j.ijindorg.2009.02.006

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Author Gerlach, Heiko
Title Stochastic market sharing, partial communication and collusion
Journal name International Journal of Industrial Organization   Check publisher's open access policy
ISSN 0167-7187
Publication date 2009-11
Sub-type Article (original research)
DOI 10.1016/j.ijindorg.2009.02.006
Open Access Status
Volume 27
Issue 6
Start page 655
End page 666
Total pages 12
Place of publication The Netherlands
Publisher Elsevier BV * North-Holland
Language eng
Formatted abstract
This paper analyzes the role of communication between firms in an infinitely repeated Bertrand game in which firms receive private signals of a common value i.i.d. demand shock. It is shown that firms can use stochastic, inter-temporal market sharing as a substitute for communication in low demand states. Partial communication in high demand states is sufficient to achieve the most collusive, full communication outcome and strictly dominates partial communication in low demand states. Communication in high demand states allows firms to coordinate their pricing, choose the most efficient uninformed price and avoid price wars. I demonstrate that under some conditions consumers are better off with communication among colluding firms.
Keyword Collusion
Competition policy
Stochastic market sharing
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Unknown

Document type: Journal Article
Sub-type: Article (original research)
Collections: ERA 2012 Admin Only
School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 2 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 4 times in Scopus Article | Citations
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Created: Mon, 26 Sep 2011, 13:54:07 EST by Alys Hohnen on behalf of School of Economics