Abstract:This paper provides a theoretical explanation of “cheating and compensation on-path of play” using a canonical repeated game model of price-fixing collusion. The novel mechanism relies on firms playing mixed strategies allowing for both the monopoly price and undercutting the monopoly price to happen with positive probability, together with a compensation scheme that punishes a price-cutter. For an intermediate range of discount factors, the mechanism is optimal in a restricted class of equilibria, and such price-cutting and compensation are necessary parts for any symmetric collusive equilibrium.

研究成果：Cheating and compensation in price-fixing cartels

发表期刊：JOURNAL OF ECONOMIC THEORY

论文链接：

https://www.sciencedirect.com/science/article/pii/S002205312100199X