Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication

This paper studies collusion in repeated Bertrand oligopoly when stochastic demand levels for the product of each rm are their private information and are positively correlated. It derives general su cient conditions for e cient collusion through communication and a simple grim-trigger strategy. This analysis is then applied to a model where the demand signal has multiple random components which respond di erently to price deviations. In this model, it is shown that the above su cient conditions hold if idiosyncratic noise terms are su ciently small.