In the context of an infinitely repeated Prisoners’ Dilemma, we explore how cooperation is initiated when players signal and coordinate through their actions. There are two types of players–patient and impatient–and a player’s type is private information. An impatient type is incapable...

This study characterizes the corporate leniency policy that minimizes the frequency with which collusion occurs. Though it can be optimal to provide only partial leniency, plausible sufficient conditions are provided whereby the antitrust authority should waive all penalties for the first firm...

A computational model of competing multi-unit firms, such as a retail chain, is developed in which unit managers and corporate staff continually search for better practices while consumers search among units to find a better match. The main objective of this research is to determine how the...

It is generally believed that industries with greater product differentiation have higher rates of return. This paper shows that this effect breaks down in the presence of firm-specific cost shocks. Greater substitutability in products generates two opposing effects: (1) it allows a larger...

Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on...

A computational model of a retail chain is developed in which store managers continually search for better practices. Search takes place over a rugged landscape defined over the space of store practices. The main objective of this research is to determine how the amount of discretion given to...