Tacit Collusion Under Imperfect Monitoring in the Canadian Manufacturing Industry: An Empirical Study

19 Pages Posted: 27 Oct 2011

See all articles by Marcelo Resende

Marcelo Resende

Universidade Federal do Rio de Janeiro (UFRJ); CESifo (Center for Economic Studies and Ifo Institute)

Rodrigo M. Zeidan

NYU Shanghai

Date Written: October 27, 2011

Abstract

The paper undertakes a cross-sectoral analysis of a salient empirical implication of the model of tacit collusion advanced by Abreu et al (1986). Specifically, the prevalence of a first order Markovian process for alternating between price wars and collusive periods is assessed by means of non-parametric tests. The analysis focuses on 30 different industries in Canada. The evidence provides weak support for optimal collusion in one industry, which is consistent with the idea that such collusive arrangements are unusual.

Keywords: tacit collusion, game theory, Canada, price war

JEL Classification: L130, L220, L610

Suggested Citation

Resende, Marcelo and Zeidan, Rodrigo M., Tacit Collusion Under Imperfect Monitoring in the Canadian Manufacturing Industry: An Empirical Study (October 27, 2011). CESifo Working Paper Series No. 3623. Available at SSRN: https://ssrn.com/abstract=1950128

Marcelo Resende (Contact Author)

Universidade Federal do Rio de Janeiro (UFRJ) ( email )

Rua Sao Francisco Xavier, 524
Instituto de Economia
Rio de Janeiro RJ 21949
Brazil

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Rodrigo M. Zeidan

NYU Shanghai ( email )

1555 Century Ave
Shanghai, Shanghai 200122
China

HOME PAGE: http://rzeidan.com

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