repeated oligopoly and collusion.

what are secret price cuts?

• firms cannot observe other firms prices.

• they can only observe their own sales.

• low sales may be due to low market demand or price undercut.

what is the Green Porter Model?

• there is a collusive phase.

• zero profit is intepreted as possible deviation.

• both set p=c for few periods.

• return to collusive level.

• creates endogenous price wars.

what is the effect of high noise?

zero sales is too common, punishment is triggered too often.

collusion collapses.

highly unpredictable markets struggle to collude.

what occurs in market sharing collusion?

• Foreign firms have higher costs due to transport.

• Giving them a share wastes resources and reduces joint profits.

• A higher temptation to cheat.

• hard to sustain market sharing.

regional monpolies?

• firms withdraw from each other’s territories.

• pure monopolist in its home region.

• maximised joint profits.

• easier to sustain collusion.

what does the indistinguishability theorem?

• authorities see prices but not firms’ true costs.

• a high price could be collusion or competition with high costs.

• firms must use hard evidence.

what are evidence of hard evidence tools?

• authorities must find internal documents.

• tools may include meeting notes and email seizures.

what are corporate leniency programmes?

• first firm to report the cartel gets reduced fines.

• creates a race to confess.

• if the reward is high enough, the cartel collapses.

what are whistleblower programmes?

• employees get rewards from reporting.

• firms must pay hush money to keep them silent.

• this raises the cost of maintaining a cartel.

• makes collusion harder to sustain.

• used to destabilise cartels from the inside.