CaltechAUTHORS
  A Caltech Library Service

Cartel Enforcement with Uncertainty About Costs

Cramton, Peter C. and Palfrey, Thomas R. (1990) Cartel Enforcement with Uncertainty About Costs. International Economic Review, 31 (1). pp. 17-47. ISSN 0020-6598. https://resolver.caltech.edu/CaltechAUTHORS:20160307-150324015

Full text is not posted in this repository. Consult Related URLs below.

Use this Persistent URL to link to this item: https://resolver.caltech.edu/CaltechAUTHORS:20160307-150324015

Abstract

What cartel agreements are possible when firms have private information about productions costs? For private cost uncertainty we characterize the set of cartel agreements that can be supported, recognizing incentive and participation constraints. If defection results in either Cournot or Bertrand competition, the incentive problem in large cartels is severe enough to prevent the cartel from achieving the monopoly outcome. However if the cartel agreement requires less than unanimous ratification by the member firms, then the incentive problem can be overcome in large cartels. With common cost uncertainty, perfect collusion is possible in large cartels, regardless of the ratification rule.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://www.jstor.org/stable/2526626JSTORArticle
http://dx.doi.org/10.2307/2526626DOIArticle
http://resolver.caltech.edu/CaltechAUTHORS:20170912-141652274Related ItemWorking Paper
ORCID:
AuthorORCID
Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:© 1990 The Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. We would like to thank Richard Kihlstrom, Robert Porter, two anonymous referees and participants of seminars at University of Pennsylvania, Stanford University, Bell Communications Research, Princeton University, and University of California, Berkeley for valuable comments. We are grateful to Northwestern University for their hospitality and to the Sloan Foundation and the National Science Foundation for their support.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
Alfred P. Sloan FoundationUNSPECIFIED
NSFUNSPECIFIED
Other Numbering System:
Other Numbering System NameOther Numbering System ID
Social Science Working Paper619
Issue or Number:1
Record Number:CaltechAUTHORS:20160307-150324015
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20160307-150324015
Official Citation:Cramton, Peter C., and Thomas R. Palfrey. 1990. “Cartel Enforcement with Uncertainty About Costs”. International Economic Review 31 (1). [Economics Department of the University of Pennsylvania, Wiley, Institute of Social and Economic Research, Osaka University]: 17–47. doi:10.2307/2526626.
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65148
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:13 Apr 2016 19:07
Last Modified:22 Nov 2019 09:58

Repository Staff Only: item control page