On collusion sustainability with stacked reversion

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Date
2015-11-09
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Juraj Dobrila University of Pula

Redes Sociales



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Abstract
We consider a multi-period oligopoly model to analyze cartel sustainability where a subset of collusive firms is exogenously given. We assume that in case of cheating only the cheater is expelled from the cartel and collusion continues without the cheater. We show that, in our model, when firms compete in quantities and the cartel is sufficiently small, a Stackelberg leader cartel can always be sustained if firms are patient enough. Furthermore, in this case collusion is more easily sustained than when firms play grim trigger strategies. The opposite result is obtained in a price-setting supergame with differentiated products.
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Keywords
Collusion, Stacked reversion, Trigger strategies, Colusión, Reversión apilada, Estrategias de activación
Citation
Escrihuela-Villar, M., & Guillén, J. (2011). On collusion sustainability with stacked reversion. Economic Research-Ekonomska Istraživanja, 24(2), 89–98. https://doi.org/10.1080/1331677x.2011.11517458