Collusion and Price Rigidity

摘要

We consider an infinitely repeated Bertrand game,in which prices are publicly observed and each firm receives a privately observed,i.i.d.cost shock in each period.We focus on symmetric perfect public equiliria,wherein any "punishments"are borne equally by all firms.We identify a tradeoff that is associated with collusive pricing schemes in which the price to be charged by each firm is strictly increasing in its cost level;such "fully sorting"schemes offer efficiency benefits,as they ensure tha tthe lowest-cost firm makes the current sale,but they also imply an informatonal cost(distortedpricint and/or equilibrium-path price ars),since a hgier-cost firm must be detrred from mimicking a lower-cost firm bychrging a lower price.a rigid-pricing scheme,where a firm'scollusive price is independent of its current cost position,sacrifices efficiency benefits but alsodiminishes the informational cost.For a wide range of settings,the optimal symmetric collusive scheme requires (i)the absence of equilibrium-path price wars and (ii)a rigid price.If firms are sufficiently impatient,however,the rigid-pricing scheme cannot be enforced,and the collusive price of lower-cost firms may be distorted downward in order to diminish the incentive to tive to cheat.when themodel is modified to incclude i.i.d.public demand shocks,the downward pricing distortion that accompanies a firm's lower-cost realizationmay occur only when current demand is high.