COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Post Office Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 726

"Optimal Cartel Equilibria with Imperfect Monitoring"

Dilip Abreu, David G. Pearce and Ennio Stacchetti

October 1984

There exist optimal symmetric equilibria in the Green-Porter model [5, 8] having an elementary intertemporal structure. Such an equilibrium is described entirely by two subsets of price space and two quantities, the only production levels used by firms in any contingency. The central technique employed in the analysis is the reduction of the repeated game to a family of static games.

JEL Classification: 611, 026

Keywords: Optimal symmetric cartel equilibria, cartels, imperfect monitoring

See CFP 656