Abstract
Recent empirical papers have analyzed collusion in the Joint Executive Committee in an attempt to determine which of several theories of cartel behavior is supported by the behavior of this 19th century railroad cartel. Non-parametric tests of whether high and low profit regimes followed a first-order Markov process when one controls for the number of firms support the theory of optimal collusion given by Abreu, Pearce, and Stachetti. Results on whether transition probabilities depend on the number of firms are inconclusive.
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Briggs, H. Optimal cartel trigger strategies and the number of firms. Rev Ind Organ 11, 551–561 (1996). https://doi.org/10.1007/BF00157778
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DOI: https://doi.org/10.1007/BF00157778