Collusion at the Extensive Margin (Presentation)

8/8/2019 Collusion at the Extensive Margin (Presentation)

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Collusion at the Extensive Margin

Martin ByfordRMIT University

Joshua GansUniversity of Melbourne

September 2010


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Introduction

Collusion at the Extensive

Margin

Introduction

The Model

Collusive Equilibria

Uncertainty

Anti-Trust

UnitingFrameworks


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Introduction

Collusion at the intensive margininvolves rms coordinating their strategic actions within the markets in which they come into contact.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Introduction


Collusion at the extensive margin involves rms coordinating their participation across markets in order to avoid coming into contact.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Introduction


Collusion at the extensive margin involves rms coordinating their participation across markets in order to avoid coming into contact.

This paper is the rst to develop a theoretical framework for analysing collusion at the extensive margin.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Motivating Case


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Motivating Case

In 2001 the Australian Competition and Consumer Commission took

Rural Press and Waikerie to the Federal Court of Australia alleginganti-competitive agreement, exclusionary conduct and abuse of market power.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Motivating Case



The matter went all the way to the High Court of Australia with the

anti-competitive agreement case upheld.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Motivating Case



The matter went all the way to the High Court of Australia with the

anti-competitive agreement case upheld.

The basic story was one of collusion at the extensive margin.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Rural Press and Waikerie


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Entry by the River News

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Entry by the River News

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The Threat

The attached copies of pages from The River News were sent to me lastweek. The Mannum advertising was again evident, which suggests yourWaikerie operator, John Pick, is still not focussing on the traditional area of operations.

I wanted to formally record my desire to reach an understanding with yourfamily in terms of where each of us focuses our publishing efforts.

If you continue to attack in Mannum, a prime readership area of the MurrayValley Standard, it may be we will have to look at expanding our operationsinto areas that we have not traditionally services [sic].

I thought I would write to you so there could be no misunderstanding ourposition. I will not bother you again on this subject.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Ian Law, Rural Press, 7 April 1998


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The Threat

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The Threat

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The Response

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The Response

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Other Relevant Cases


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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In Bell Atlantic v. Twombly it was alleged that the Baby Bells conspired to restrict competition for local telephone services by failing toexpand into one and others territories.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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The Supreme Court held that parallel conduct alone does notcreate a plausible inference of an illegal arrangement.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Apple followed Googles entry into the smart phone market by purchasing the mobile advertising company Quattro Wireless andannouncing the iAds service.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Apple followed Googles entry into the smart phone market by purchasing the mobile advertising company Quattro Wireless andannouncing the iAds service.

It was reported that Apples action was a reprisal against Googlefollowing Googles violation of a gentlemans agreement. (Stone &Helft, 2010)


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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I d i


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Contrasting Literature


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

I t d ti


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Edwards (1955) discussed mutual forbearance by conglomerates.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

I t d ti


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Stigler (1964) argues that while colluding at the extensive margin may produce the most robust collusive agreements, these agreements areeasy to detect.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Green and Porter (1984) show that rms may employ temporary punishments to facilitate collusion in the presence of uncertainty.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Bernheim and Whinston (1990) show that multi-market contact canfacilitate collusion by pooling participation constraints.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Athey, Bagwell and Sanchirico (2003) show that rms may keep pricesrigid to assist in preserving the stability of a collusive outcome.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Athey, Bagwell and Sanchirico (2003) show that rms may keep pricesrigid to assist in preserving the stability of a collusive outcome.

Fershtman and Pakes (2000) use a semi-collusive Markov perfect

equilibrium to isolate collusion on a single dimension.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Bernheim-Whinston (1990)


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Simple intuition: rms should enter multiple markets to improvecartel stability.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Complication: requires some combination of non-identical rms,markets and non-constant returns to scale.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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That is, multi-market contact is irrelevant with identical rms,markets and constant returns to scale.


Margin

Introduction

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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That is, multi-market contact is irrelevant with identical rms,markets and constant returns to scale.

Did not consider the possibility that collusion might involve marketforbearance.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Research Questions


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Research Questions

What conditions support collusion at the extensive margin?


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Research Questions


How does the presence of multiple markets facilitate collusion?


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Research Questions



How do different enforcement mechanisms perform in terms of stability and expected returns?


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Research Questions



How do different enforcement mechanisms perform in terms of stability and expected returns?

What are the implications for anti-trust policy of collusion takingplace at the extensive margin?


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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The Model

Introduction


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Primitives


Margin

The Model


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Introduction


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Primitives

A nite set I of rms.


Margin

The Model


Uncertainty

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Introduction


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Primitives


A nite set N of distinct markets or separable market segments.


Margin

The Model


Uncertainty

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UnitingFrameworks

Introduction


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Primitives



Entry into a market costs a rm an amount c. The cost of maintaining a presence is captured in the prot function.


Margin

The Model


Uncertainty

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UnitingFrameworks

Introduction


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Primitives




Each market is modelled as a repeated simultaneous moves non-cooperative game.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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Primitives




Each market is modelled as a repeated simultaneous moves non-cooperative game.

The game has an innite number of periods. All rms have identicaldiscount rate, . Collusion at

the Extensive

Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Timing


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Period t

Timing


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Period t

ParticipationStage

Timing


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Period t

ParticipationStage

State Revealed

Timing


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Period t

ParticipationStage

State Revealed

MarketStage

Timing


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Period t

ParticipationStage

State Revealed InstantaneousProts Realised

MarketStage

Timing

Introduction


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Markov Perfect Equilibrium


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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The general model nests Bernheim and Whinstons (1990) model of multi-market contact. From the perspective of the basic framework

the key addition is the inclusion of the participation stage.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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In order to rene the (very large) set of subgame perfect equilibriawe conne our attention to the set of Markov Perfect equilibria(MPE).


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction


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In the market stage the payoff relevant information is the prole of rm participation resulting from actions in the participation stage.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

h d l


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In the market stage the payoff relevant information is the prole of rm participation resulting from actions in the participation stage.

In the participation stage the payoff relevant information is the proleof rm participation from the previous period. This prole dictatesfor which markets a rm must pay an entry cost if it wishes toparticipate in the market in the current period.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

Th M d l


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Lemma 1


Margin

The Model


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Introduction

Th M d l


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Lemma 1

Assumption 1: In a one shot game each market produces a unique(expected) equilibrium payoff vector for each prole of participation.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

Th M d l


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Lemma 1


Initially we assume that markets are identical, separable andsymmetric. The paper contains a richer model in which markets andrms are permitted to be heterogeneous.


Margin

The Model


Uncertainty

Anti-Trust

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Introduction

The Model


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Lemma 1



Oligopolistic prot to a rm in a market with q participants arewritten *(q).


Margin

The Model


Uncertainty

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Introduction

The Model


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Lemma 1



Oligopolistic prot to a rm in a market with q participants arewritten *(q).

Lemma 1: In a Markov perfect equilibrium (MPE) each rm takes itsstatic Nash equilibrium action in the market stage , subject to theprevailing prole of participation.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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Competitive Equilibrium


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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Assumption 2 (Expansion Incentive): Entry into an additional marketis always protable for a rm, holding the participation of the

remaining rms constant.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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The strong version of assumption 2 requires MPE instantaneousprot to satisfy *(m) > *(m + 1) > c for all m I .


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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The strong version of assumption 2 requires MPE instantaneousprot to satisfy *(m) > *(m + 1) > c for all m I .

Proposition 1 (Competitive Equilibrium): Where assumptions 1 and2 hold it is always an MPE for all rms to enter and remain in every market.


Margin

The Model


Uncertainty

Anti-Trust

UnitingFrameworks


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Introduction

The Model


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Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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Where collusion takes place at the extensive margin a collusiveagreement has two components:


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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A partition P of the set N of markets that assigns each market to arm or to a contested component of the partition in which all rmsparticipate. A collusive partition is characterised by the number of markets n i in each rm is component of the partition.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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A partition P of the set N of markets that assigns each market to arm or to a contested component of the partition in which all rmsparticipate. A collusive partition is characterised by the number of markets n i in each rm is component of the partition.

An enforcement mechanism that utilises the threat of reciprocal entry to counter the expansion incentive.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


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Partitioning Contests


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Contested

Introduction

The Model


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Grim Strategy Enforcement


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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Grim strategy enforcement requires permanent reversion to thecompetitive equilibrium as soon as any rm is observed deviatingfrom the collusive partition.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Introduction

The Model


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With identical, separable and symmetric markets grim strategy collusion requires that MPE instantaneous prots decrease at rate

that is more than proportional to a change in participation: *(1)/ m > *(m).


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

f

Introduction

The Model


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With identical, separable and symmetric markets grim strategy collusion requires that MPE instantaneous prots decrease at rate

that is more than proportional to a change in participation: *(1)/ m > *(m).


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

GS = maxiI

j = in j

(2) cn i (1) (I ) + j = i n j (2) (I ) c

Initial Deviation (t = 1)


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Contested



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Contested

Grim Strategy Enforcement (t 2)


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Contested

E C

Introduction

The Model


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Entry Costs


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

E C

Introduction

The Model


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Entry Costs

The value of critical for the stability of the cartel is decreasing in theentry cost c as barriers to entry decrease the returns to a deviation.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

E C

Introduction

The Model


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Entry Costs


Innitesimal entry cost need not prevent collusive partition of markets.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

E t C t

Introduction

The Model


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Entry Costs


Innitesimal entry cost need not prevent collusive partition of markets.

Where c goes to zero and N is at least as large as I there exists apartition P that assigns an equal number of markets to each member of the cartel which is stable for sufciently high .


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


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Uncer tainty and Tit-for-Tat Equilibria

Tit f T t E f t

Introduction

The Model


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Tit-for-Tat Enforcement


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Tit f T t E f t

Introduction

The Model


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Where punishments may be triggered along the equilibrium path, or a subset of markets display natural monopoly characteristics, a cartelmay prefer an enforcement mechanism with temporary punishments.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Tit for Tat Enforcement

Introduction

The Model


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At the intensive margin temporary punishments tend to only vary in terms of length.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks

Tit for Tat Enforcement

Introduction

The Model


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At the intensive margin temporary punishments tend to only vary in terms of length.

Single period punishments can be effective at the extensive margin.Moreover, punishments can be targeted at individual rms and scaled to match the size of an initial deviation.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


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Contested



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Contested



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Gain in Period 1



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Gain in Period 1

Loss in Period 1

Multilateral EnforcementIntroduction

The Model



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Multilateral Enforcement


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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Multilateral enforcement requires a deviation to be punished by temporary reversion to the competitive equilibrium.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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If at least one rm is present in another rms market, and at leastone rm is not present in every market, then all rms enter every market.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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If at least one rm is present in another rms market, and at leastone rm is not present in every market, then all rms enter every market.

Otherwise all rms withdraw from every market belonging to a rivalplayer.


Margin


Uncertainty

Anti-Trust

UnitingFrameworks


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Multilateral Response (t = 2)


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Contested

Tit-for-Tat Response (t = 2)


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Gain in Period 1

Loss in Period 1



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Gain in Period 2

Gain in Period 1

Loss in Period 1



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Gain in Period 2

Loss in Period 2

Gain in Period 1

Loss in Period 1

Heavy-Handed EnforcementIntroduction

The Model



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Heavy Handed Enforcement


Margin

q

Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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The heavy-handed enforcement mechanism treats each pair of rmsindependently.


Margin

q

Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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For each pair of rms {i, j }, if rm i is present in at least one of rm j s markets, and rms i and j are not present in all of each othersmarkets, then both rms enter all of each others markets.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks


The Model



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For each pair of rms {i, j }, if rm i is present in at least one of rm j s markets, and rms i and j are not present in all of each othersmarkets, then both rms enter all of each others markets.

Otherwise rms i and j withdraw from every market belonging to the other player.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks

Heavy Handed Response (t = 2)


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Contested

Heavy Handed Response (t = 2)


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Contested



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Gain in Period 1

Loss in Period 1



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Gain in Period 2

Gain in Period 1

Loss in Period 1



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Gain in Period 2

Loss in Period 2

Gain in Period 1

Loss in Period 1

Proportional Response EnforcementIntroductionThe Model



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p p


Margin

Uncertainty

Anti-Trust

UnitingFrameworks




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p p

The proportional response enforcement mechanism treats each pair of rms independently as well as scaling punishments to the initial

transgression.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks




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p p


transgression.

For each pair of rms {i, j }, if rm i is present in at least one of rm j s markets, and rms i and j are not present in an equal number of each others markets, then the rm in the fewest of its rivals contestsenters additional contests sufcient to equalise cross participation.


Margin

Uncertainty

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UnitingFrameworks




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p p


transgression.

For each pair of rms {i, j }, if rm i is present in at least one of rm j s markets, and rms i and j are not present in an equal number of each others markets, then the rm in the fewest of its rivals contestsenters additional contests sufcient to equalise cross participation.

Otherwise rms i and j withdraw from every market belonging to the other player.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks

Proportional Response Response (t = 2)


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Contested

Proportional Response Response (t = 2)


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Contested



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Gain in Period 1

Loss in Period 1



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Gain in Period 2

Gain in Period 1

Loss in Period 1



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Gain in Period 2

Loss in Period 2

Gain in Period 1

Loss in Period 1

Return to the Equilibrium Path (t > 2)


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Contested

Stability ConditionsIntroductionThe Model



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Margin

Uncertainty

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UnitingFrameworks




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Margin

Uncertainty

Anti-Trust

UnitingFrameworks




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Margin

Uncertainty

Anti-Trust

UnitingFrameworks

Uncer tainty and Tit-for-Tat EnforcementIntroductionThe Model


i


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Margin

Uncertainty

Anti-Trust

UnitingFrameworks



U i


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Suppose that with some small probability a player makes a mistakeand enters too many markets in the participation stage. Supposefurther that this mistake is commonly observed.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks



U t i t


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The expected cost to rms of a mistake is higher under heavy handed enforcement than under proportional response enforcement.It follows that proportional response enforcement is payoff dominant.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks



U t i t


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Multilateral enforcement may be stable where proportional response

enforcement is not.


Margin

Uncertainty

Anti-Trust

UnitingFrameworks



Uncertainty


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Multilateral enforcement may be stable where proportional response

enforcement is not.

(Caveat: It is possible to design perverse systems of uncertainty where these results do not hold.)


Margin

Uncertainty

Anti-Trust

UnitingFrameworks

Predatory Entry


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Predatory Entry


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Natural Monopoly Market Natural Duopoly Market

Firm 1 Firm 2Predatory Entry


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Natural Monopoly Market Natural Duopoly Market



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Gain in Period 1



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Gain in Period 1 Loss in Period 1

Firm 1 Firm 2Response (t = 2)


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Gain in Period 2



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Gain in Period 2

Loss in Period 2



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Gain in Period 2

Loss in Period 2 Loss in Period 2

(1) (2) + m (2)

Firm 1 Firm 2Return to the Equilibrium Path (t = 3)


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12

Firm 1 Firm 2Return to the Equilibrium Path (t = 3)


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Uncertainty


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Margin

Anti-Trust

UnitingFrameworks



Uncertainty


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Margin

Anti-Trust

UnitingFrameworks


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Implications for Anti-Trust Policy IntroductionThe Model


Uncertainty


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Margin

Anti-Trust

UnitingFrameworks



Uncertainty


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Participation across the set of markets may be easier to observe thana rms strategic behaviour within a market.


Margin

Anti-Trust

UnitingFrameworks



Uncertainty


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Collusion at the extensive margin can be implemented by a smaller

group of managers than collusion at the intensive margin, helping toreduce the risk of detection.


Margin

Anti-Trust

UnitingFrameworks



Uncertainty


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A cartel may be able to avoid prosecution by aligning the boundariesof a collusive partition with the boundaries of anti-trust authority

jurisdictions.


Margin

Anti-Trust

UnitingFrameworks

Implications for Anti-Trust Policy

Introduction

The Model


Uncertainty


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A cartel may be able to avoid prosecution by aligning the boundariesof a collusive partition with the boundaries of anti-trust authority

jurisdictions.

The theory provides new insights into where we may nd a collusiveagreement operating.


Margin

Anti-Trust

UnitingFrameworks

Management Complicity in Multi-Market Collusion


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Management Complicity in Multi-Market Collusion


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Firm Level

Vic

WA SA

Qld NT

NSW

Tas

Management Complicity in Extensive MarginCollusion


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Firm Level

WA SANSW



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Firm Level

Monopoly Monopoly

WA SANSW



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Firm Level

Monopoly Monopoly Competitive

WA SANSW



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Firm Level

Transnational Extensive Margin Collusion


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Firm 1 Firm 2


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Firm 1 Firm 2

Firm 3


Firm 1 Firm 2


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Firm 3

ACCC


Firm 1 Firm 2


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Firm 3

ACCCCompetitionBureau


Firm 1 Firm 2


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Firm 3

ACCC

CompetitionCommission

CompetitionBureau



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Firm 1

CompetitionBureau


Firm 1 Firm 2


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Firm 3

ACCC

CompetitionCommission

CompetitionBureau

Beer or Soft Drink Market


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Retail Sales

Vending Machine Location B



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Retail Sales

Restaurant Chain A

Restaurant Chain B

Restaurant Chain C

Bar A

Bar B

Sports Ground

Entertainment Venue

Vending Machine Location A


Vending Machine Location C

Convenience Store A

Convenience Store B

Collusive FringeFirm 1 Firm 2


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Retail Sales

Restaurant Chain A

Restaurant Chain B

Restaurant Chain C

Bar ABar B

Sports Ground

Entertainment Venue

Vending Machine Location A


Vending Machine Location C

Convenience Store A

Convenience Store B

Contested


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Uniting Frameworks:Collusion at the Intensive and Extensive

Margins

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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Uniting

Frameworks


Margin

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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All MPEs are sub-game perfect and therefore are equilibria of theunied framework.

Uniting

Frameworks


Margin

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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Consider a multi-market setting containing two identical, separable

and symmetric markets and suppose that two rms collude utilisinggrim strategy enforcement.

Uniting

Frameworks


Margin

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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If the rms collude at the intensive margin of both markets they eachreceive C from each market while deviating nets a rm D.

Uniting

Frameworks


Margin

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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Uniting

Frameworks


Margin

GS = (2)

(1) (2)

Relative Stability

Introduction

The Model


Uncertainty

Anti-Trust


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Uniting

Frameworks


Margin

GS = (2)

(1) (2) IM =

D C

D (2)

Complementarities Between Collusion at the Intensive and Extensive Margins

Introduction

The Model


Uncertainty

Anti-Trust


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Uniting

Frameworks


Margin


Introduction

The Model


Uncertainty

Anti-Trust


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Consider a multi-market setting containing three identical, separableand symmetric markets.

Uniting

Frameworks


Margin


Introduction

The Model


Uncertainty

Anti-Trust


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Suppose that each rm acts as a monopolist in one market while

colluding at the intensive margin of the third market. A deviation ispunished by permanent reversion to the oligopolistically competitiveequilibrium.

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Margin


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A rm can either deviate in the participation or market stage but not

both. Punishments are carried out across all markets

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Introduction

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A rm can either deviate in the participation or market stage but not

both. Punishments are carried out across all markets

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Margin

crit < max { GS , IM }

Length versus Breadth of Punishment

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189/197

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The temporary punishments set out in the paper persist for exactly one period.

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The strength of each punishment can be increased by increasing thelength of the punishment.

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The strength of each punishment can be increased by increasing thelength of the punishment.

Length and scope of punishment are substitutes.

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Conclusion

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Conclusion

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We develop the rst theoretical framework in which rms may collude by coordinating market participation to avoid coming intocontact.

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Conclusion

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Extensive margin collusion has a number of features that may make itattractive for a cartel.

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Conclusion

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We provide the rst game theoretic foundation for proportionalresponse enforcement.

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Conclusion

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We provide the rst game theoretic foundation for proportionalresponse enforcement.

Uniting

Frameworks

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Collusion at the Extensive Margin (Presentation)

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