Author:
Bos Iwan,Letterie Wilko,Vermeulen Dries
Abstract
Abstract
This paper examines collusion among firms whose discount factors are private information. Mutual uncertainty regarding intentions to restrict competition might undermine the possibility of tacit collusion. Firms that want to collude may, however, reveal their intentions by consciously acting in breach of antitrust laws. As antitrust activity makes explicit collusion costly in expected terms, it can potentially be (ab)used as signaling device. We show that the fight against cartels may indeed facilitate collusion.
Subject
Economics, Econometrics and Finance (miscellaneous),Economics and Econometrics
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