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1.
This paper analyzes the farsighted behaviour of firms that form a dominant price leadership cartel. We consider stability concepts such as the farsighted core, the farsighted stable sets, and the largest consistent set. We show that: (i) the farsighted core is either an empty set or a singleton set of the grand cartel; (ii) any Pareto efficient cartel is itself a farsighted stable set; and (iii) the set of cartels in which fringe firms enjoy higher profits than the firms in the minimal Pareto efficient cartel is the largest consistent set.  相似文献   

2.
We discuss the effects of the existence of non‐colluding (fringe) firms on cartel sustainability. We obtain, using trigger strategies, that with product differentiation collusion is always more easily sustained when firms compete in prices than when firms compete in quantities. This is true basically because (i) price competition is more intense than quantity competition, and (ii) fringe firms exacerbate the fact that cartel firms have more incentives to deviate from the agreement under quantity competition. This result reverses previous findings where, in the absence of fringe firms, product differentiation plays a crucial role in determining the effectiveness of price or quantity competition in sustaining collusion.  相似文献   

3.
We consider a nonrenewable resource game with one cartel and a set of fringe members. We show that (i) the outcomes of the closed-loop and the open-loop nonrenewable resource game with the fringe members as price takers (the cartel–fringe game à la Salant, 1976) coincide and (ii) when the number of fringe firms becomes arbitrarily large, the equilibrium outcome of the closed-loop Nash game does not coincide with the equilibrium outcome of the closed-loop cartel–fringe game. Thus, the outcome of the cartel–fringe open-loop equilibrium can be supported as an outcome of a subgame-perfect equilibrium. However the interpretation of the cartel–fringe model, where from the outset the fringe is assumed to be price taker, as a limit case of an asymmetric oligopoly with the agents playing Nash–Cournot, does not extend to the case where firms can use closed-loop strategies.  相似文献   

4.
This paper considers the stability of tacit collusion in price setting duopolies with repeated interaction. The minimum discount factor above which tacit collusion can be sustained in a subgame perfect equilibrium is called the critical discount factor δ*. In addition, δ* is often used as an intuitive measure for the stability of a tacit cartel, assuming that a collusive equilibrium is more difficult to sustain when δ* increases. However, according to standard theory the distance δ − δ* between the actual and the critical discount factor does not matter for stability as long as δ > δ*. This paper contributes experimental evidence that supports the intuitive idea that a larger critical discount factor makes collusion a less likely outcome.   相似文献   

5.
When imperfect collusion is profitable   总被引:1,自引:0,他引:1  
This paper studies cartel stability under the assumption that member firms can choose intermediate degrees of collusion as well as the joint-profit-maximizing solution in determining the quota to be produced by each firm. After showing that firms can increase the number of participants by decreasing the degree of collusion, I prove that individual members' profits are maximized when firms choose a (possibly low) degree of collusion such that all firms in the industry want to take part in the cartel. More precisely, if the number of firms in the industry is four or less, then all of them want to take part in the cartel even if the maximum degree of collusion is chosen (i.e., the monopoly output is produced); if the number of firms is greater than four, firms will still create an industry-wide cartel but they will produce a higher quantity than the monopoly output.  相似文献   

6.
The interplay between R&D activity and cartel stability is investigated in a vertical differentiation framework with convex costs. The behaviour of firms' critical discount factors as the curvature of the cost function varies is investigated, considering either price- or quantity-setting behaviour. In order to stabilize collusion, firms are better off playing à la Cournot and supplying the non-cooperative qualities. There emerges a tradeoff between the reduction of the convexity of the cost function and the associated increase in marginal cost. The decision to carry out joint or independent ventures in research is also investigated, showing that such a decision is non-monotone in intertemporal discounting. Policy measures are then briefly discussed.  相似文献   

7.
Summary. This paper analyzes cartel stability when firms are farsighted. It studies a price leadership model á la D Aspremont et al. (1983), where the dominant cartel acts as a leader by determining the market price, while the fringe behaves competitively. According to D Aspremont et al. s (1983) approach a cartel is stable if no firm has an incentive to either enter or exit the cartel. In deciding whether to deviate or not, a firm compares its status quo with the outcome its unilateral deviation induces. However, the firm fails to examine whether the induced outcome will indeed become the new status quo that will determine its profits. Although the firm anticipates the price adjustment following its deviation, it ignores the possibility that more firms may exit (or enter) the cartel. In other words, the firm does not consider the fact that the outcome immediately induced by its deviation may not be stable itself. We propose a notion of cartel stability that allows firms to fully foresee the result of their deviation. Our solution concept is built in the spirit of von Neumann and Morgensterns (1944) stable set, while it modifies the dominance relation following Harsanyis (1974) criticism. We show that there always exists a unique, non-empty set of stable cartels.Received: 20 August 2002, Revised: 11 August 2004, JEL Classification Numbers: C79, D43, D49, L13.On page 921, the final paragraph as well as the two references by Rothschild were inserted.This revised version was pulished in February 2005.I would like to thank Joseph Greenberg, Licun Xue, Daniel Arce M. and Curtis Eberwein for their helpful suggestions on an earlier draft. I am indebted to an anonymous referee for his very constructive comments.  相似文献   

8.
Using the spatial price discrimination framework, the relationship between the locations of firms and their ability to collude is investigated. Gupta and Venkatu (2002) show that in a duopoly model agglomeration at one point is the most stable location. We find that agglomeration stabilizes the cartel when there are three firms, too. When there are more than three firms, however, agglomeration of all firms is never the most stable location. With four firms, the following location pattern produces the most stable cartel: two firms at one point and the other two at the farthest point from the first two.  相似文献   

9.
We examine the profitability of two different cartel organizational forms: full collusion, under which firms collude on both price and quality, and semicollusion, under which firms collude on price only. We show that, in the presence of demand uncertainty that cannot be contracted upon in the cartel agreement, firms may be better off limiting their collusive agreement to price only. However, a positive relationship between demand uncertainty and the relative profitability of semicollusion exists only for low levels of demand substitutability. The converse is true for high levels of demand substitutability. Therefore, if demand substitutability is sufficiently high, no level of demand uncertainty will make semicollusion the optimal organizational form. In contrast, semicollusion is guaranteed to be optimal for a sufficiently low level of demand substitutability. The market structure described is motivated by and closely parallels that of shipping cartels. Received September 29, 2000; revised version received December 10, 2001 Published online: November 11, 2002  相似文献   

10.
The existing literature which analyses the relationship between the product differentiation degree and the sustainability of a collusive agreement on price assumes that firms cannot price discriminate, and concludes that there is a negative relationship between the product differentiation degree and the critical discount factor. This paper, in contrast, assumes that firms are able to price discriminate. Within the Hotelling framework, three different collusive schemes are studied: perfect collusion on discriminatory prices; perfect collusion on a uniform price; collusion not to discriminate. We obtain that the critical discount factor of the first and the third collusive scheme does not depend on the product differentiation degree, while the critical discount factor of the second collusive scheme depends positively on the product differentiation degree. Moreover, we show that imperfect collusion is more difficult to sustain than perfect collusion.  相似文献   

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