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RelProMax Antitrust, Inc.
About the RPM Method for Preventing Collusion
- General Definition of RPM:
- The term "Relative Profit Maximizing" (abbreviated as "RPM")
refers to managerial or business firm behavior,
which has the goal of attempting to maximize
the relative profits of a business firm.
RPM incentives are compensation schemes which induce
the managers of business firms to attempt to maximize
the profits of their firms relative to the profits
of competing firms.
- Definition of Relative Profits:
- Relative profits are the profits of a firm
relative to the profits of competing firms
within the same market or industry.
Conventional economics normally assumes that
business firms attempt to maximize absolute profits.
Absolute profits are simply a measure of profits
which is unconcerned with whether the profits
are higher or lower than profits of some other firm.
- Definition of Zero-Sum Game:
- The term "game" as used by economists implies
a method for analyzing both games and
real-life business situations.
A zero-sum game arises when there are only
a fixed amount of rewards that can be distributed
to the players of the game.
In a zero-sum game, if one person gets more,
at least one other person must get less.
Dividing up a pie of fixed size is an example
of a zero-sum game.
- Combining RPM Incentives:
- When two or more business firms adopt RPM incentives,
and if these RPM incentives are adjusted in the right way,
the result is a zero-sum game among the business firms.
****etc.
- This Page Is Unfinished:
- I will complete this page as soon as I have time.
- Additional Details:
- Further details of a more technical nature can be found in
the papers and patents listed under
Technical Papers.
Comments, questions, and suggestions can be sent to
RelProMax Antitrust, Inc.
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