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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.

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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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