Can Labor Markets Help Resolve Collusion?

7 Pages Posted: 16 Jan 2011

See all articles by Jeremy Bertomeu

Jeremy Bertomeu

Washington University in St. Louis - John M. Olin Business School

Date Written: January 14, 2007

Abstract

We show that, in a multi-agent contract setting, the principal can effectively rule out tacit collusion among agents (i.e., “bad” equilibrium) by posting permanent job openings to an external labor market. That is, a simple “market-like” employment mechanism can yield collusion-proof contracts.

Keywords: Implementation, Contracts, Labor, Opening, Mechanism Design, Collusion

JEL Classification: C7, D2, D8, J4

Suggested Citation

Bertomeu, Jeremy, Can Labor Markets Help Resolve Collusion? (January 14, 2007). Economics Letters, Vol. 95, pp. 355-361, 2007, Available at SSRN: https://ssrn.com/abstract=1740924

Jeremy Bertomeu (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

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