Maintaining Privacy in Cartels
Name
699975.pdf
Description
Published version
Size
1.1 MB
Format
Adobe PDF
Checksum (MD5)
ff1e5ebbde32caa599703daf4df31167
Author(s)
Sugaya, Takuo
Wolitzky, Alexander Greenberg
Date Issued
December 2018
Journal
Journal of Political Economy
Publisher
University of Chicago Press
Citation
Sugaya, Takuo and Alexander Wolitzky. "Maintaining Privacy in Cartels." Journal of Political Economy 126, 6 (December 2018): 2569-2607 © 2018 University of Chicago.
Version
Final published version
Abstract
It is conventional wisdom that transparency in cartels—monitoring of competitors’ prices, sales, and profits—facilitates collusion. However, in several recent cases cartels have instead worked to preserve the privacy of their participants’ actions and outcomes. Toward explaining this behavior, we show that cartels can sometimes sustain higher profits when actions and outcomes are observed only privately, because better information can hinder collusion by helping firms devise more profitable deviations from the collusive agreement. We provide conditions under which maintaining privacy is optimal for cartels that follow a market-segmentation strategy.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1086/699975
