Cartel Stability with Time-dependent Detection Probabilities

To account for the illegal nature of price-fixing agreements, detection probabilities are introduced in a dynamic oligopoly. For a trigger strategy to sustain a non-cooperative collusive equilibrium as a SPNE both the discount rate and all per-period detection probabilities must be ‘low’. The domain reduces for which the strictest IC constraint is binding if (i) any per-period detection probability increases, (ii) prospective fine payments are increased, (iii) the period of limitation is reduced for violating antitrust laws.