Template-type: ReDif-Paper 1.0
Author-Name: Vermeulen A.J. 
Author-Name: Bos A.M. 
Author-Name: Letterie W.A. 
Author-workplace-name: GSBE
Title: Antitrust as facilitating factor for collusion
Abstract: We study collusion in an infinitely repeated prisoners' dilemma when firms' discount factor is private information. If tacit collusion is not feasible, firms that are capable of sustaining high prices may still be willing and able to collude explicitly. Firms eager to collude may signal their intentions when forming the agreement is costly, but not too costly. As antitrust makes explicit collusion costly in expected terms, it may in fact function as a signaling device. We show that there always exists a cost level for which explicit collusion is viable. Moreover, our analysis suggests that antitrust enforcement is unable to fully deter collusion.
Keywords: Market Structure, Firm Strategy, and Market Performance: General; Antitrust Issues and Policies: General; 
Classification-JEL: L10; L40; .
Series:  Research Memorandum
Creation-Date: 2013
Number: 011
File-URL: http://pub.maastrichtuniversity.nl/5db76dda-7b1f-42cc-87d5-f4fb8eb6e251
File-Format: application/pdf
File-Size: 360346
Handle: RePEc:unm:umagsb:2013011