Opportunism problems of colluding manufacturers

Arbeitspapier

In a market with two exclusive manufacturer-retailer pairs, we show that colluding manufacturers may not be able to attain supra-competitive profits when contracts with retailers are secret. The stability of manufacturer collusion depends on the retailers' beliefs. We consider various dynamic beliefs and find that industry-profit-maximizing collusion is feasible for some. Collusion is even renegotiation-proof under trigger beliefs if a novel condition of opportunism-proofness holds, which can be more demanding than the standard stability condition. Trigger beliefs are not flexible enough to allow for formation of collusion. We demonstrate that adaptive beliefs may be necessary for the formation of manufacturer collusion in a non-collusive industry.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2118

Classification and Topics

• Classification: Wirtschaft ; Monopolization; Horizontal Anticompetitive Practices ; Vertical Restraints; Resale Price Maintenance; Quantity Discounts ; Retail and Wholesale Trade; e-Commerce
• Subject: opportunism ; credible punishment ; cartel formation ; manufacturer collusion ; vertical relations ; renegotiation-proof ; secret contracting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Grieselmann, Jana ; Hunold, Matthias ; Muthers, Johannes ; Rasch, Alexander
• Event: Veröffentlichung
• (who): Johannes Kepler University of Linz, Department of Economics
• (where): Linz
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/249047
• Last update: 10.03.2025, 11:43 AM CET