Failure to collude in the presence of asymmetric information

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Jeon, Doh Shin. Failure to collude in the presence of asymmetric information. 2001
To cite or link this document: Jeon, Doh Shin
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa 2001-08-01
dc.description.abstract In this paper, we design the optimal contract when two agents can collude under asymmetric information. They have correlated types, produce complementary inputs and are protected by limited liability. Therefore, a joint manipulation of reports allows them to internalize informational and productive externalities. We show that by taking advantage of the transaction costs created by asymmetric information, even though they collude, the principal can achieve the outcome without collusion regardless of the sign and the degree of correlation. In particular, the principal can implement a non-monotonic quantity schedule in a collusion-proof way while this is impossible if collusion occurs under complete information.
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 574
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.title Failure to collude in the presence of asymmetric information
dc.type info:eu-repo/semantics/workingPaper 2014-06-03T07:14:06Z
dc.subject.keyword Microeconomics
dc.subject.keyword asymmetric information
dc.subject.keyword transaction costs
dc.subject.keyword limited liability
dc.subject.keyword side-contract
dc.subject.keyword collusion-proofness
dc.subject.keyword virtual cost
dc.rights.accessRights info:eu-repo/semantics/openAccess

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