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The Role of Demand Information and Monitoring on Tacit Collusion
The RAND Journal of Economics (2012)
  • Christian Rojas, University of Massachusetts - Amherst
Motivated by the Green and Porter (1984) and Rotemberg and Saloner (1986) models, we construct lab experiments to test the effects of two factors on collusion: information (regarding next period's demand state) and monitoring (of a rival's past action). Results indicate that information may facilitate collusion more than monitoring, especially as subjects gain experience. A robust finding is that subjects in the Rotemberg and Saloner treatment cooperate as predicted by this theory: collusion falls dramatically in anticipation of unusually large demand and returns to high levels otherwise. These results suggest that tacit and fairly elaborate collusion could arise in stochastic environments.
Publication Date
Spring 2012
Publisher Statement
Doi: 10.1111/j.1756-2171.2012.00157.x
Citation Information
Christian Rojas. "The Role of Demand Information and Monitoring on Tacit Collusion" The RAND Journal of Economics Vol. 43 Iss. 1 (2012)
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