| Abstract: | I present an infinitely repeated game model where a monopolist seller has a contractual obligation with several buyers in each period. If a contract is violated the buyer can collect some compensation and impose a penalty on the seller. There are an infinite number of subgame perfect equilibria in this model, but I employ the concept of e-validated equilibrium to pick out a unique equilibrium outcome for the game where the seller is able to dominate the buyers. This model is clearly applicable to supply problems of Soviet-type economies, but it can explain certain phenomena of Western economies as well. |
