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http://dx.doi.org/10.11627/jkise.2013.36.4.77

Developing an Equilibrium Analysis Model of Cartel Game under Leniency Programs  

Park, Jihyun (Department of Industrial and Management Engineering, Hanyang University)
Ahn, Suneung (Department of Industrial and Management Engineering, Hanyang University)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.36, no.4, 2013 , pp. 77-83 More about this Journal
Abstract
This study is to develop a mathematical analysis model to grasp the behaviors of cartels. Cartels are formed tacitly and cause tremendous damage to consumers in modern society which is composed of advanced industry structure. The government authorities have instituted the leniency programs to respond cartels. However, cartels will continue unless there are legal sanctions against cartels based on an accurate analysis of leniency programs. The proposed cartel equilibrium analysis model is a mathematical behavior model which is based on the existing methods and the prison's dilemma of game theory. Therefore, the model has a form of pay off matrix of two players. We use a iterated polymatrix approximation (IPA) method to deduct a Nash equilibrium point. The model is validated by an empirical analysis as well.
Keywords
Cartel; Leniency Program; Prison's Dilemma; Iterated Polymatrix Approximation;
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