This paper reports 45 laboratory duopoly markets that examine the importance of information sharing in facilitating tacit collusion under conditions of demand uncertainty. Sellers in these repeated laboratory markets generally shared information when possible to reduce their demand uncertainty, which led to output reductions in some demand states. Risk aversion is a likely explanation for this ...

In contrast to the existing literature on repeated games that assumes a Þxed discount factor, I study an environment in which it is more realistic to assume a ßuctuating discount factor. In a repeated oligopoly, as the interest rate changes, so too does the degree to which Þrms discount the future. I characterize the optimal tacit collusion equilibrium when the discount factor changes over time...

When collusive agreements are illegal, oligopolies must rely on the threat of future price wars to sustain collusion. If firms’ objective is to maximize the present value of profits, the shadow of that threat changes with the interest rate. That is, the interest rate determines how much firms discount the future, and this affects the level of collusion that can be supported. In an environment o...

We investigate collusive pricing in laboratory markets when human players interact with an algorithm. compare the degree of (tacit) collusion exclusively humans to case one firm market delegating its decisions further vary whether participants know about presence find that three-firm involving algorithmic player are significantly more than human-only markets. Firms employing algorithm earn less...

Research in accounting traditionally regards transfer pricing as an intra-firm transaction problem. Within the context of a simple Cournot model, we demonstrate that firms can use transfer prices strategically as a collusive device. While firms are individually better off from a centralized organizational form with each internal division transferring intermediate goods at marginal cost, all fir...