Regensburg 2013 – scientific programme

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 6: Economic Models

SOE 6.1: Talk

Monday, March 11, 2013, 15:00–15:15, H37

Regulation of self-organized cartel dynamics via information dissemination — •Tiago P. Peixoto and Stefan Bornholdt — Institut für Theoretische Physik, Universität Bremen, Hochschulring 18, D-28359 Bremen, Germany

In a simplified model of a market where buyers are forced to buy from a predetermined number of sellers which they can choose, there occurs the emergence of a "cartel phase" where sellers agree on a higher average price, despite the lack of communication between them, and thus any agreement on a specific strategy. The onset of this dynamical phase is controlled by a single parameter which specifies the relative speed with which the sellers update their strategies, compared to the buyers. If this value is below a critical value, the cartel phase is replaced by an optimum for the buyers, where the prices become the lowest possible.

Recent legislative measures were proposed which intended to thwart this effect in actual gasoline markets. They consist in forcing the sellers to report any price change immediately, so that a global price repository can be built. We incorporate this regulatory feature in the model, and investigate the conditions necessary for the existence of the cartel phase.

T.P.Peixoto, S.Bornholdt, "No Need for Conspiracy: Self-Organized Cartel Formation in a Modified Trust Game", Phys. Rev. Lett. 108, 218702 (2012)