Can Labor Markets Help Resolve Collusion?
7 Pages Posted: 16 Jan 2011
Date Written: January 14, 2007
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: Suggested Citation