“A Self-Reporting Mechanism for Collusion Enforcement” by Jimmy Chan
Author:
Jimmy Chan
Shanghai University of Finance and Econonomics
This paper proposes a collusion-enforcement mechanism whereby member firms of a cartel are punished by an amount proportional to the self-reported profit shortfalls of other cartel members. Since a firm's profit report affects only the punishments of other firms, the mechanism is incentive compatible without additional restrictions on the demand functions and distribution of demand shocks.
