Microeconomics
Question：Does collusion imply anti-competitiveness?
Collusion or incentives to collude are known to be major strategies among oligopolists in order to improve their pay-offs. Formation of a cartel, bidding rings etc. are examples of this. Modern
constitutional amendments like the Sherman Act and Clayton Act in the USA and the European Antitrust Regulation have set out high penalties for the detection of collusive activity. For example the
British Airways was fined about 55 million GBP for fuel surcharge fixing with Virgin Atlantic two years ago. So a natural question arises, whether the assertion collusion is anti-competitive is
indeed true and if it is then under what conditions and for what reason. So it is worth investigating this question in different setting, esp. in price and quantity competing oligopolies.
Notes:
This assignment is going to be a written essay (100%). As a structured step; (1) you will need to first analyse the outcome of a price setting game without investment (2) Second, you will need to
think about structure of the game when you include investment in (a) one-shot (b) finite number of periods and (c) infinite number of periods. Understanding a one-shot game well is the key to
understanding a repeated game well. Considering imperfect information about cost in this setting will deserve extra credit. Use of backward/forward induction is essential in such games.
Word Limit: 2500 words
Learning Outcomes:
• Apply optimization theory and game theory with specific use of repeated games with imperfect information.
• Apply equilibrium analysis to this particular market.
General Marking Scheme
Grade % Mark Requirements
(Fail) 0 No answer has been attempted or evidence of unfair practice.
1 – 9 The work presented for assessment may be incomplete and/or irrelevant and demonstrates a serious lack of comprehension and/or engagement with the set task. Attainment of the
learning outcomes is minimal and assessment criteria are not addressed.
10 – 19 Misunderstanding or misinterpretation of the set task, providing a short and/or largely irrelevant response. Consequently, no learning outcomes are met in full although there may be
minimal attainment in relation to one or two.
20 – 29 Minimal understanding of the set task and will partially have met some of the learning outcomes. Little knowledge and understanding of the field of study relevant to the task.
Limited ability shown to communicate simple concepts
and/or factual information. Significant difficulties in report’s structure and organisation detract from the clarity and meaning overall. Evidence of individual reading and investigation is
negligible and the limited referencing of literature and other sources is frequently inaccurate. Demonstrates some ability to describe and report but very little evidence is available to indicate
an ability to engage in critical evaluation and reflection. No real evidence of linking experiment’s results to economic theory.
30 – 39 Partial understanding of the set task and some of the associated learning outcomes met at a basic level. Factual inaccuracies, errors and misconceptions are evident in important
areas and elements of the assessed work may
be irrelevant to the task. If attempted, the presentation of arguments and more complex ideas may be confused and clumsily expressed. Some enquiry and analysis relevant to the task attempted but
outcomes may be naïve, simplistic and/or unconvincing. Demonstrates limited knowledge of current research/scholarship in the discipline. A restricted range of sources are used but overall, there is
an over-reliance on programme materials with little evidence of individual reading and investigation. There are frequent errors in the referencing of literature and other sources. The
work is largely descriptive and arguments, if attempted, are rarely substantiated. Some weak evidence of linking theory to the outcomes of the experiment.
(Third) 40 – 49 Demonstrates a basic understanding of the set task and an ability to have met the associated learning outcomes and addresses the assessment criteria at a threshold level. Displays a
basic knowledge and understanding of many aspects of the field of study relevant to the task. Reproduction of information received from elsewhere (e.g. programme materials). Errors and
misconceptions will be evident but these are outweighed by the degree of knowledge and understanding demonstrated overall. More success is achieved in describing and reporting factual information
rather than communicating complex ideas. Generally, the work is appropriately structured although key points may not be logically sequenced. Some limited analysis and enquiry relevant to the
task/discipline included and has intermittent success in presenting and commenting on outcomes. A limited ability to critically evaluate and reflect. Although some critical reflection is evident,
the balance within the work is likely to be in favour of description and factual presentation. Connections are made between economic theory and the experiment, but not always in a completely
appropriate manner.
(Lower Second) 50 – 59 A secure understanding of the set task and an ability to have met the associated learning outcomes and address the assessment criteria at a satisfactory level. Displays a
sound knowledge and understanding of most key aspects of the field of study relevant to the task and there is some evidence of an ability to apply such knowledge. Some evidence of independent
thinking beyond programme notes. Overall, the structure and format of the work are appropriate. Occasional faults in the presentation of work, but overall, these do not detract from the clarity of
expression. Examples of research/scholarship referred to in the work demonstrate individual reading and investigative ability to critically evaluate and reflect although there may be some over-
reliance on description and factual presentation. Arguments are usually substantiated. The experiments results are mostly correctly related to basic economic theory.
(Upper Second) 60-69 Demonstrates a full understanding of the set task and an ability to have met the learning outcomes and address the assessment criteria at a good level. A detailed knowledge
and thorough understanding of key aspects of the field of study relevant to the task are shown. There is clear evidence of an ability to apply such knowledge and, in some contexts, to extend and
transform it. Discussion of complex concepts is often tackled successfully and there is evidence of independent thinking. Displays an ability to communicate information, ideas and concepts clearly
and succinctly. Work is well presented and the format appropriate. Key points are appropriately organised and the writing style is fluent and arguments are well articulated. Detailed analysis and
critical enquiry relevant to the task/discipline is undertaken by making use of appropriate techniques and has considerable success in presenting and commenting on outcomes. There is linkage
between theory and practice. Examples referred to indicate a breadth and depth of individual reading and investigation that extend beyond the sources provided. The referencing of literature and
other sources is almost always accurate. Arguments are clearly considered and substantiated and there is evidence of an ability to make appropriate judgements and to suggest solutions to problems.
Good connections between economic theory and the results of the experiment, with most relevant theory covered. Some evidence of other real life examples used provide backup the experiment data.
(First) 70 – 79 Demonstrates a full and detailed understanding of the set task and an ability to have met the learning outcomes and address the assessment criteria at a very good level.
A detailed knowledge and systematic understanding of key aspects of the field of study relevant to the task are evident. There is strong evidence of an ability to extend, transform and apply such
knowledge. The student also demonstrates an ability to engage in confident discussion of complex concepts and to recognise the limitations and ambiguity of disciplinary knowledge. Independent
thinking and original insights are also present in the report. Ability shown in communicating information, complex ideas and concepts in a coherent and succinct manner. The standard of presentation
is high and the format appropriate. Key points are logically organised and in written work, the style is lucid and mature. Detailed and thorough knowledge of current research/advanced scholarship
in the discipline. The use of scholarly reviews/primary sources is confident and a breadth and depth of individual reading and investigation, extending beyond the sources provided, is apparent. The
referencing of literature and other sources is accurate and in line with academic conventions. An ability to engage in critical evaluation of concepts/arguments/data and to make appropriate and
informed judgements is shown. Arguments are well developed, sustained and substantiated. Where relevant, assumptions are challenged and there is clear recognition of the complexities of academic
debate. Appropriate and sometimes innovative solutions are offered to problems.
80 – 89 Beyond the above, a full and detailed understanding of the set task and an ability to have met the learning outcomes and address the assessment criteria at an excellent level is
displayed.
90 – 100 Beyond the above, demonstrates a full and detailed understanding of the set task and an ability to have met the learning outcomes and address the assessment criteria at an
outstanding and exceptional level. Work is of a standard deemed to be worthy of publication Reference citations extend significantly beyond the main body of reading normally expected in the
discipline/field of study.

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