Can Mechanism Designers Exploit Buyers' Market Information

It is known that mechanism designers can extract agents' information about competitors' mechanisms in a competing mechanism game. This makes it possible for sellers to punish each other for deviations even when they do not directly observe other sellers' mechanisms. This allows for very collusive equilibria. This paper is concerned with whether these collusive equilibria can be sustained in large markets when buyers either don't understand sellers mechanisms, or find it costly to convey their market information. We provide conditions under which collusive equilibria will persist in large markets and conditions under which all equilibria of the competing mechanism game will become competitive.