Collusion enforcement with private information and private monitoring

This paper shows that a cartel that observes neither costs, prices, nor sales may still enforce a collusive agreement by tying each firm's continuation profit to the truncated current profits of the other firms. The mechanism applies to both price and quantity competition, and the main features are broadly consistent with common cartel practice identified by Harrington and Skrzypacz [24]. (C) 2015 Elsevier Inc. All rights reserved.