Public policy and property-liability insurance

Insurance industry ; Public policy

Posted Pricing as a Plus Factor

This paper identifies conditions under which an industry-wide practice of posted (or list) pricing is a plus factor sufficient to conclude that firms violated Section 1 of the Sherman Act. For certain classes of markets, it is shown that, under competition, all firms setting a list price with a policy of no discounting is contrary to equilibrium. Thus, if all firms choose posted pricing, it is to facilitate collusion by making it easier for them to coordinate their prices. It is then argued that the adoption of posted pricing communicates the necessary intent and reliance to conclude concerted action.

Corporate Leniency with Private Information: The Push of Prosecution and the Pull of Pre-emption

A corporate leniency program provides relief from government penalties to the first member of a cartel to come forward and cooperate with the authorities. This study explores the incentives to apply for leniency when each cartel member has private information as to the likelihood that the competition authority will be able to convict them without a cooperating firm. A firm may apply for leniency because it fears being convicted ("prosecution effect") or because it fears another firm will apply ("pre-emption effect"). Policies by the competition authority to magnify concerns about pre-emption - and thereby induce greater use of the leniency program - are also explored.

A Theory of Tacit Collusion

A theory of tacit collusion is developed based on coordination through price leadership and less than full mutual understanding of strategies. It is common knowledge that price increases are to be at least matched but who should lead and at what price is not common knowledge. The steady-state price is characterized and it falls short of the best collusive equilibrium price. Coordination through tacit means, rather than express communication, is then shown to constrain the extent of the price rise from collusion.

A robust high-sensitivity algorithm for automated detection of proteins in two-dimensional electrophoresis gels

The automated interpretation of two-dimensional gel electrophoresis images used in protein separation and analysis presents a formidable problem in the detection and characterization of ill-defined spatial objects. We describe in this paper a hierarchical algorithm that provides a robust, high-sensitivity solution to this problem, which can be easily adapted to a variety of experimental situations. The software implementation of this algorithm functions as part of a complete package designed for general protein gel analysis applications

Multi-wavelength Signatures of Cosmic Rays in the Milky Way

Cosmic rays (CRs) propagate in the Milky Way and interact with the interstellar medium and magnetic fields. These interactions produce emissions that span the electromagnetic spectrum, and are an invaluable tool for understanding the intensities and spectra of CRs in distant regions, far beyond those probed by direct CR measurements. We present updates on the study of CR properties by combining multi-frequency observations of the interstellar emission and latest CR direct measurements with propagation models.Comment: 8 pages, 4 figures. Proceedings of the 35th International Cosmic Ray Conference, ICRC201

Private Monitoring and Communication in Cartels: Explaining Recent Collusive Practices

Motivated by recent cartel practices, a stable collusive agreement is characterized when firms' prices and quantities are private information. Conditions are derived whereby an equilibrium exists in which firms truthfully report their sales and then make transfers within the cartel based on these reports. The properties of this equilibrium fit well with the cartel agreements in a number of markets including citric acid, lysine, and vitamins. (JEL D43, D82, K21, L12, L61, L65)

Signaling and Tacit Collusion in an Infinitely Repeated Prisoners' Dilemma

In the context of an infinitely repeated Prisoners.Dilemma, we explore how cooperation is initiated when players signal and coordinate through their actions. There are two types of players - patient and impatient - and a player's type is private information. An impatient type is incapable of cooperative play, while if both players are patient types - and this is common knowledge - then they can cooperate with a grim trigger strategy. We find that the longer that players have gone without cooperating, the lower is the probability that they'll cooperate in the next period. While the probability of cooperation emerging is always positive, there is a positive probability that cooperation never occurs.