Jump to ContentJump to Main Navigation
Show Summary Details
In This Section

The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

2 Issues per year


IMPACT FACTOR 2016: 0.229
5-year IMPACT FACTOR: 0.271

CiteScore 2016: 0.30

SCImago Journal Rank (SJR) 2015: 0.458
Source Normalized Impact per Paper (SNIP) 2015: 0.553

Mathematical Citation Quotient (MCQ) 2015: 0.16

Online
ISSN
1935-1704
See all formats and pricing
In This Section

Sellers’ Implicit Collusion in Directed Search Markets

Seungjin Han
  • Corresponding author
  • Department of Economics, 1280 Main Street West, McMaster University, Hamilton, Ontario, Canada L8S 4M4
  • Email:
Published Online: 2016-06-02 | DOI: https://doi.org/10.1515/bejte-2015-0106

Abstract

This paper studies a competing-mechanism game for directed search markets in which multiple sellers simultaneously offer selling mechanisms to multiple buyers in order to compete for trading opportunities and profits. Buyers approach any particular seller via directed search, but there can be mis-coordination among buyers in the sense that they choose all the sellers offering the same mechanism with equal probability. A seller’s mechanism can be sufficiently general to make his trading price contingent on participating buyers’ messages, which may reflect changes in trading prices somewhere else. This allows sellers to sustain implicit collusion. This paper focuses on symmetric equilibria in which sellers offer the same mechanism that induces buyers’ ex-post truth telling on market information. It provides the characterization of all symmetric ex-post truth telling equilibrium allocations and comparative statics regarding the range of equilibrium prices and profits. In a large market, the probability that sellers can sell their products at collusive prices depends on the ratio of buyers to sellers.

Keywords: implicit collusion; competing mechanism; online markets; clickstream; robust equilibrium

JEL: C71; D82

References

  • Burdett, K., S. Shi, and R. Wright. 2001. “Pricing and Matching with Frictions.” Journal of Political Economy 109 (5):1060–85.

  • Epstein, L., and M. Peters. 1999. “A Revelation Principle for Competing Mechanisms.” Journal of Economic Theory 88 (1):119–60.

  • McAfee, P. 1993. “Mechanism Design by Competing Sellers.” Econometrica 61 (6):1281–312.

  • Myerson, R. 1997. Game Theory: Analysis of Conflict. Cambridge, Massachusetts, USA: Harvard University Press.

  • Han, S. 2007. “Strongly Robust Equilibrium and Competing-Mechanism Games.” Journal of Economic Theory 137 (1):610–26.

  • Han, S. 2015. “Robust Competitive Auctions.” Economics Letters 136:207–10. [Web of Science]

  • Peters, M. 1991. “Ex Ante Price Offers in Matching Games Non-Steady States.” Econometrica 59 (5):1425–54.

  • Peters, M. 1997. “A Competitive Distribution of Auctions.” Review of Economic Studies 64 (1):97–123.

  • Peters, M. 2001. “Common Agency and the Revelation Principle.” Econometrica 69 (5):1349–72.

  • Peters, M. 2014. “Competing Mechanisms.” Canadian Journal of Economics 47 (2):373–97. [Web of Science]

  • Peters, M., and C. Troncoso-Valverde. 2013. “A Folk Theorem for Competing Mechanisms.” Journal of Economic Theory 148 (3):953–73. [Web of Science]

  • Yamashita, T. 2010. “Mechanism Games with Multiple Principals and Three or More Agents.” Econometrica 78 (2):791–801. [Web of Science]

About the article

Published Online: 2016-06-02

Published in Print: 2016-06-01



Citation Information: The B.E. Journal of Theoretical Economics, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2015-0106. Export Citation

Comments (0)

Please log in or register to comment.
Log in