Publications
Publications
- 2016
Collusion in Markets with Syndication
By: John William Hatfield, Scott Kominers and Richard Lowery
Abstract
Markets for IPOs and debt issuances are syndicated, in the sense that a bidder who
wins a contract may invite losing bidders to join a syndicate that together fulfills the
contract. We show that in markets with syndication, standard intuitions from industrial
organization can be reversed: Collusion may become easier as market concentration
falls, and market entry may in fact facilitate collusion. In particular, price collusion
can be sustained by a strategy in which firms refuse to join the syndicate of any firm
that deviates from the collusive price. Our results thus can rationalize the apparently
contradictory empirical facts that the market for IPO underwriting exhibits seemingly
collusive pricing despite its low level of market concentration.
Keywords
Citation
Hatfield, John William, Scott Kominers, and Richard Lowery. "Collusion in Markets with Syndication." Working Paper, November 2016.