Explicit Collusion and Market Share Allocations

We show that explicit cartels can implement market share allocations using a reporting framework that is considered to be legally acceptable for trade associations. This simple resolution of the market share cartel’s monitoring problem provides an explanation for the apparent prevalence of market share allocations relative to customer or geographic allocations by explicit cartels. Keywords: explicit collusion, tacit collusion, price …xing, antitrust, trade associations JEL Classi…cations: C72, L13, L41 The authors thank the Human Capital Foundation (http://www.hcfoundation.ru) for support. We are grateful to Scott Lobel, Chip Miller, Matthew Rai¤, and Steven Schulenberg for helpful comments. All errors are our own. The authors can be reached at Department of Economics, 613 Kern Graduate Bldg., University Park, PA 16802, [email protected], and Fuqua School of Business, Duke University, Durham, NC 27708, [email protected].