Abstract:This paper provides a theoretical explanation of “cheating and compensation on-path of play” using a canonical repeated game model of price-fixing collusion. The novel mechanism relies on firms playing mixed strategies allowing for both the monopoly price and undercutting the monopoly price to happen with positive probability, together with a compensation scheme that punishes a price-cutter. For an intermediate range of discount factors, the mechanism is optimal in a restricted class of equilibria, and such price-cutting and compensation are necessary parts for any symmetric collusive equilibrium.

本文在2022年三月正式发表于Journal of Economic Theory 第200卷。该期刊为经济与管理学院A类期刊。

论文链接：https://doi.org/10.1016/j.jet.2021.105382‍