Detection and deterrence of collusion are longstanding antitrust problems, made difficult because collusive arrangements are usually surreptitious. In this paper, I discuss factors that facilitate or inhibit collusive schemes, as well as circumstances where detection is possible. I describe how industrial organization economists diagnose collusion (both explicit and tacit) among firms.

This paper considers the question of tacit collusion in repeated auctions with independent private values and with limited public monitoring. McAfee and McMillan show that the extent of collusion is tied to availability of transfers. Monetary transfers allow cartels to extract full surplus. A folk theorem proved by Fudenberg at al. shows that transfers of future payoffs are almost as good if pl...

We study an auction design problem where the auctioneer anticipates that bidders collude tacitly. We model tacit collusion in the following way: whichever auction the auctioneer announces, it becomes the stage game of a corresponding repeated game, and out of all sequential equilibria of the resulting repeated game, bidders play the one that maximizes their total ex ante payoff. We show that an...

This article undertakes a cross-sectoral analysis of a salient empirical implication of the model of tacit collusion advanced by Abreu, Pearce, and Stachetti (1986). Specifically, we assess the prevalence of a first-order Markovian process for alternating between price wars and collusive periods through nonparametric tests. The analysis focuses on 30 different industries in Canada. The evidence...

Reward programs, a promotional tool to develop customer loyalty, offer incentives to consumers on the basis of cumulative purchases of a given product or service from a firm. Reward programs have become increasingly common in many industries. The best-known examples include frequent-flier programs offered by airlines, frequent-guest programs offered by hotels, and frequent-shopper programs offe...

This article tests experimentally whether a high degree of collusion on advertisement expenditures facilitate tacit price collusion in duopoly markets. Two environments are tested, in which the size of the spillover between advertising expenditures is varied. The results show that the competitiveness of advertising and prices are significantly higher when the advertising spillover is higher tha...

This article explores the concept of algorithmic tacit collusion and potential role market investigation tools in addressing this issue. The use algorithms online sales markets has raised concerns about anti-competitive effects adequacy current competition law provisions. European Commission been considering implementation a 'New Competition Tool' (NCT) to address structural issues beyond scope...

A theory of tacit collusion is developed based on coordination through price leadership and less than full mutual understanding of strategies. It is common knowledge that price increases are to be at least matched but who should lead and at what price is not common knowledge. The steady-state price is characterized and it falls short of the best collusive equilibrium price. Coordination through...

We study competition between political parties in repeated elections with probabilistic voting, allowing a multidimensional policy space and multiple parties. This model entails equilibria. When hold different opinions on some policy, they may take positions that do not coincide the median voter’s preferred platform but converge towards it. In contrast, when have mutual understanding particular...