Endogenous Monitoring in a Partnership Game

Résumé

I consider a repeated game in which, due to imperfect monitoring, no collusion can be sustained. I add a self-interested monitor who commits to obtain private signals of firms' actions and sends a public message. The monitor makes an offer specifying the precision of the signals obtained and the amount to be paid in return. First, with a low monitoring cost, collusive equilibria exist. Second, collusive equilibria are monitor-preferred. Third, in monitor-preferred equilibria, firms' payoffs are decreasing in the discount factor. My model helps explain cartel agreements between self-interested parties and firms in legal industries in the United States and Europe.

Référence

Anna Sanktjohanser, « Endogenous Monitoring in a Partnership Game », American Economic Review, vol. 110, n° 3, mars 2020, p. 776–796.