Collusive Systems of Changing Market Shares – A Game Theoretic Refutation

Effectively fighting cartels requires that cartels be discovered. Economic theory gives some behavioural patterns that are indicative of collusion and allow the distinction between collusion from competition. This paper focuses on the volatility of market shares as indicator for collusive behaviour, which can serve to screen industries to determine whether they are worthy of more intense investigation. Thus the paper discusses the interrelationship between collusion/competition and the stability of market shares. Thereby it demonstrates in a game theoretic model reasons for higher instability of cartels which try to establish a system of changing market shares to fool the authority