Econometrica: Jan 1984, Volume 52, Issue 1

Noncooperative Collusion under Imperfect Price Information

https://doi.org/0012-9682(198401)52:1<87:NCUIPI>2.0.CO;2-6
p. 87-100

Edward J. Green, Robert H. Porter

Recent work in game theory has shown that, in principle, it may be possible for firms in an industry to form a self-policing cartel to maximize their joint profits. This paper examines the nature of cartel self-enforcement in the presence of demand uncertainty. A model of a noncooperatively supported cartel is presented, and the aspects of industry structure which would make such a cartel viable are discussed.

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