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on Contract Theory and Applications |
| By: | Corchón, Luis C.; Correa-Lopera, Guadalupe; Moreno, Bernardo |
| Abstract: | Traditional collusion models typically assume that players coordinatetheir actions actively during the competition process to influence the outcomes.In contrast, we consider a repeated interaction setting betweentwo players where collusion occurs through well-defined strategies: theplayers take turns, with one holding monopoly power while the other eitherrefrains from participating or behaves as if absent. We provide afull characterization of when taking turns constitutes a subgame perfectNash equilibrium in repeated games. By allowing players to discount timedifferently, we uncover a novel, non-monotonic condition on the discountfactor that sustains collusion. We apply our findings to three specificcontexts: contests, duopoly, and political competition. |
| Keywords: | Collusion; Political competition; Repeated games; Subgame perfect Nash equilibrium; Take-turns |
| JEL: | D43 C62 C73 D72 |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:46355 |
| By: | Satoru Fujishige; Zaifu Yang |
| Abstract: | We propose a novel strategy-proof dynamic auction for efficiently allocating heterogeneous indivisible commodities. The auction applies to all unimodular demand types of Baldwin and Klemperer’s necessary and sufficient condition for the existence of competitive equilibrium which accommodate a variety of complements, substitutes, gross substitutes and complements, and any other kinds. Although bidders are not assumed to be price-takers so they can act strategically, this auction induces bidders to bid truthfully, yielding efficient outcomes. Sincere bidding is shown to be an ex post perfect Nash equilibrium of the auction. The trading rules are simple, detail-free, privacy-preserving, error-tolerant, and independent of any probability distribution assumption. |
| Keywords: | Dynamic Auction Design, Equilibrium, Incentive Compatibility, Unimodular Demand Types, Indivisibility, Incomplete Information. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:yor:yorken:25/02 |