Buyers' and sellers' cartels on markets with indivisible goods

This paper analyzes the formation of cartels of buyers and sellers in a simple model of trade inspired by Rubinstein and Wolinsky's (1990) bargaining model. When cartels are formed only on one side of the market, there is at most one stable cartel size. When cartels are formed sequentially on the two sides of the market, there is also at most one stable cartel configuration. Under bilateral collusion, buyers and sellers form cartels of equal sizes, and the cartels formed are smaller than under unilateral collusion. Both the buyers' and sellers' cartels choose to exclude only one trader from the market. This result suggests that there are limits to bilateral collusion, and that the threat of collusion on one side of the market does not lead to increased collusion on the other side.     

RJVs in product innovation and cartel stability

Abstract. We characterise the interplay between firms' decision in product development undertaken through a research joint venture (RJV), and the nature of their ensuing market behaviour. Participant firms in an RJV face a trade-off between saving the costs of product innovation by developing similar products to one another, e.g., by sharing most of the basic components of their products, and investing higher initial efforts in product innovation in order to develop more distinct products. We prove that the more the firms' products are distinct and thus less substitutable, the easier their collusion is to sustain in the marketing supergame, either in prices (Bertrand) or in quantities (Cournot). This gives rise to a non-monotone dependence of firms' product portfolio upon their intertemporal preferences. Received: 1 October 1998 / Accepted: 14 December 2002 We thank the seminar audience at Centre for Industrial Economics, University of Copenhagen, where all three authors were affiliated at the time we presented the first draft of this paper, and also the two anonymous referees for Review of Economic Design for their detailed comments. The usual disclaimer applies.     

Antitrust Compliance: Managerial Incentives and Collusive Behavior

This article analyzes a manager's incentives to establish and sustain an illegal collusive agreement if her firm is subject to profit shocks, if her utility function is concave in profits (e.g., because of risk aversion), and if she incurs opportunity costs (e.g., by violating a social norm). The model supports the empirical observation that if collusion is to be established and sustained in a state with low profits, then this state must be quite persistent. It also indicates that compliance with antitrust laws can be ensured best by combining a zero tolerance policy with a strategy of forgiveness. Copyright © 2017 John Wiley & Sons, Ltd.     

Renegotiation and Collusion in Organizations

It has been argued that collusion among the members of an organization may lead to inefficiencies and hence should be prevented in equilibrium. This paper shows that whenever the parties to an organization can renegotiate their incentive scheme after collusion, these inefficiencies can be greatly reduced. Moreover, it might not be possible to prevent collusion and renegotiation in equilibrium. Indeed, if collusion is observable but not verifiable, then the organization's optimal incentive scheme will always be renegotiated. If, instead, collusion is not observable to the principal, both collusion and renegotiation will occur in equilibrium with positive probability. The occurrence of collusion and renegotiation should therefore not be taken as evidence of the inefficiency of an organization.     

On the relationship between product substitutability and tacit collusion

This paper examines the effect of increased product substitutability on quantity‐setting firms’ ability to sustain tacit collusion in a market. It uses a general demand function and the trigger strategy of Friedman (Friedman JW. 1971. A non‐cooperative equilibrium for supergames. Review of Economic Studies 38: 1–12) to show that while increased product substitutability hinders sustainability of tacit collusion in the case of linear and concave demand functions, it may either hinder or facilitate firms’ ability to sustain tacit collusion in the case of convex demand functions. Thus, this paper adds to the growing view that one must use a case‐by‐case analysis in judging whether firms in more homogenous product markets find it easier or harder to tacitly collude. Copyright © 1999 John Wiley & Sons, Ltd.     

Collusive Market Sharing and Corruption in Procurement

This paper investigates links between corruption and collusion in procurement. A first-price multiple-object auction is administered by an agent who has legal discretion to allow for a readjustment of (all) submitted offers before the official opening. The agent may be corrupt, that is, willing to "sell" his decision in exchange for a bribe. Our main result shows that the corrupt agent's incentives to extract rents are closely linked with that of a cartel of bidders. First, collusive bidding conveys value to the agent's decision power. Second, self-interested abuse of discretion to extract rents (corruption) provides a mechanism to enforce collusion. A second result is that package bidding can facilitate collusion. We also find that with corruption, collusion is more likely in auctions where firms are small relative to the market. Our main message to auction designers, competition authorities and criminal courts is that risks of collusion and of corruption must be addressed simultaneously. Some other policy implications for the design of tender procedures are discussed.     

Detection of collusion in government procurement auctions

Research on bidder collusion in procurement auctions is reasonably successful in unveiling the mechanisms of collusion among the bidders. But it is relatively weak in forwarding effective practical methods of collusion detection before the winner is declared, because they presuppose the knowledge of collusion in specific auctions. Past studies, however, point out the need for working with bid price-to-reserve price ratios rather than bid prices or winning bid prices, to be free from the problem of heteroscedasticity. They also draw an important inference that the set of collusive data are significantly different from the set of competitive data. On the basis of these basic facts, the current paper outlines a seven-step approach to collusion detection. The approach makes rudimentary statistical analysis of bid price-to-reserve price ratios for all the bidders. The analysis comprises tests of equality of means, medians and variance and tests of skewness, autocorrelation and normality of the ratios. It divides the ratios into two significantly different clusters. The cluster with the higher mean and variance values of the ratios corresponds to collusive bidding with the other cluster corresponding to competitive bidding. The paper proposes the construction of a process control chart to detect occurrence of collusion in an auction immediately after the price bids are opened. The approach is illustrated by applying it to data from procurement auctions for construction projects in a State Department of the Republic of India.     

合作策略性行为的产业组织分析

本文按信息条件将合作策略性行为分为默契合作策略性行为和明确合作策略性行为。首先介绍了默契合作策略性行为三种策略 ,然后分析了十种明确合作策略性行为的商业实践 ,最后是对合作策略性行为的公共政策评论。     

战储物资采购定价过程中合谋问题的博弈分析

战储物资采购定价过程的容易发生在军方和供应商之间的合谋问题可分成两情况:一种是信息不对称情况下合谋问题;另一种是存在第三方监管下合谋问题。运用博弈理论对这两种情况进行了探讨,在此基础上,得出解决此类合谋问题的最佳策略。     

Loyalty Rewards Facilitate Tacit Collusion

Using a dynamic overlapping‐generations model, we show that loyalty rewards robustly facilitate tacit collusion. We compare the sustainability of tacit collusion when uniform prices are used, when loyal customers are rewarded without using commitment, and when loyalty rewards are implemented by committing to offering customers either lower fixed repeat‐purchase prices or fixed repeat‐purchase discounts. We find that, relative to uniform prices, rewarding loyalty without using commitment on the equilibrium path makes tacit collusion easier to sustain, because a deviating firm is unable to steal one period of industry profit before losing all future profits. When loyalty rewards are offered by firms committing to repeat‐purchase prices, collusion is even easier to sustain, because a deviating firm cannot renege on its discounted price for repeat‐purchase customers. When firms commit to repeat‐purchase discounts, they also commit to lowering the price for their repeat‐purchase customers if they undercut the regular price, rendering tacit collusion to be even more readily sustainable. Our results hold whether products are homogeneous or horizontally differentiated as in a Hotelling model.     

On the profitability of collusion in location games

In this note we take a first step towards the analysis of collusion in markets with spatial competition, focusing on the case of pure location choices. We find that collusion can only be profitable if a coalition contains more than half of all players. This result holds for location games played in k-dimensional Euclidean space as long as consumers are distributed via atomless density functions. For competition on the unit interval, unit circle, and unit square we also derive sufficient conditions for collusion to be profitable. The results have immediate implications for mergers in spatial markets.     

基于博弈论的建设工程项目承包商与监理合谋问题研究

运用多期完全信息动态博弈模型分析建设工程项目中承包商和监理之间的合谋条件及其对承包商道德风险行为的影响。承包商和监理事后合谋可以使承包商不需承担其事前道德风险行为引起的返工成本,从而引发承包商事前的道德风险行为。在此基础上分析监理有限责任对罚款政策有效性的影响,并研究监理资质管理对抑制监理和承包商合谋乃至承包商道德风险的作用机制。     

内部控制的博弈分析

本文构建了一个关于合谋的博弈模型,用以分析内部控制制度中职责分工能够发挥牵制作用的机理,并分析了各种参数对控制效果的影响。     

注册会计师与被审计对象合谋行为分析

作为独立性最强的注册会计师审计,对促进我国证券市场的稳定和健康发展起到了重要作用。但近年来系列审计失败事件的不断曝光,注册会计师与被审计对象合谋行为逐步引起了人们的重视,本文对审计合谋动机、产生的条件进行了剖析,并有针对地提出了相关对策及建议。     

注册会计师“审计合谋”问题探析

十几年来来,国内外资本市场频繁发生的财务报告舞弊案例,很多都牵涉到注册会计师的审计合谋问题,使投资者损失惨重,市场信心大降。审计合谋严重影响了注册会计师审计的独立性,造成了严重的经济社会后果。本文在阐明注册会计师审计合谋形成机理的基础上,结合我国实际剖析审计合谋的动因,并提出防范和治理审计合谋的对策。     

Hierarchies and information-processing organizations

This paper analyzes organizational structures that minimize information processing costs for a specific organizational task. Organizations consist of agents of limited ability connected in a network. These agents collect and process information, and make decisions. Organizations implement strategies – mappings from environmental circumstances to decisions. The strategies are exogenously given from a class of “pie” problems to be defined in this paper. The notion of efficiency is lexicographic: the primary criterion is minimizing the number of agents, and the secondary criterion is minimizing the number of connections between the agents. In this modeling framework, efficient organizations are not hierarchical for a large number of problems. Hierarchies often fail to exploit fully the information processing capabilities of the agents because in a hierarchy, subordinates have a single superior. Received: 1 December 1995 / Accepted: 11 October 1998     

Manufacturer collusion: Strategic implications of the channel structure

We investigate how the structure of the distribution channel affects tacit collusion between manufacturers. When selling through a common retailer, we find—in contrast to the conventional understanding of tacit collusion that firms act to maximize industry profits—that colluding manufacturers strategically induce double marginalization so that retail prices are above the monopoly level. This lowers industry profits but increases the profit share that manufacturers appropriate from the retailer. Comparing common distribution with independent (exclusive) distribution, we show that the latter facilitates collusion. Despite this result, common retailing leads to lower welfare because a common retailer monopolizes the downstream market. For the case of independent retailing, we also demonstrate that contract offers that are observable to the rival retailer are not necessarily beneficial for collusive purposes.     

Two-agent collusion-proof implementation with correlation and arbitrage

This paper characterizes the optimal collusion-proof mechanism in a two-agent nonlinear pricing environment. Our model allows agents to have correlated types and to reallocate their total purchases among themselves. We show that, under strongly negative correlation, the coalition will, sometimes, be torn apart at no cost. Under positive or weakly negative correlations, however, the threat of collusion forces the principal to distort allocation away from the first-best level obtained without collusion. We also show that, in contrast to the result of Laffont and Martimort (Econometrica 68:309–342, 2000), when the correlation is almost perfectly positive, the possibility of arbitrage prevents the principal from approaching the first-best efficiency.     

Strategy-proof allocation when preferences are single-plateaued

Abstract. We consider private good economies with single-plateaued preferences. A solution selects for each preference profile a non-empty set of allocations. An agent strictly prefers a set of allocations to another set of allocations if and only if he strictly prefers any allocation in the first set to any in the second set according to his single-plateaued preference relation. We characterize the class of sequential-allotment solutions by essentially single-valuedness, Pareto-indifference, and coalitional stragety-proofness. These solutions are the Pareto-indifferent extensions of the solutions studied by Barberà et al. 1997. Received: 9 May 2000 / Accepted: 1 May 2001     

Implementation of multi-agent incentive contracts with the principal's renegotiation offer

The purpose of this paper is to explore a mechanism for supporting desired equilibrium actions in a one-principal, multi-agent model when the principal makes a renegotiation offer. We show that there exists a mechanism in which the principal's most preferred mixed strategy is always supported. Received: 30 May 1997 / Accepted: 10 October 1998