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The size of stable cartels: An analytical approach

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  • Zu, Lei
  • Zhang, Jin
  • Wang, Shouyang
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    Abstract

    In this paper, we revisit the size of stable cartels in a symmetric oligopoly model with a Cournot fringe. Konishi and Lin (1999) make a conjecture on the size of stable cartels. Due to algebra complexity, they test the conjecture by conducting numerical simulations. We provide an analytical approach to determine the size of stable cartels, and show that the size of stable cartels is slightly larger than the one in their conjecture. Furthermore, we find that the uniqueness of the stable cartel in Konishi and Lin (1999) could not always hold.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0167718711000828
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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Industrial Organization.

    Volume (Year): 30 (2012)
    Issue (Month): 2 ()
    Pages: 217-222

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    Handle: RePEc:eee:indorg:v:30:y:2012:i:2:p:217-222

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    Web page: http://www.elsevier.com/locate/inca/505551

    Related research

    Keywords: Cartel stability; Uniqueness; Oligopoly; Cournot fringe;

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    1. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2001. "Stable International Environmental Agreements: An Analytical Approach," Working Papers 04001, Concordia University, Department of Economics, revised Feb 2003.
    2. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    3. Prokop, Jacek, 1999. "Process of dominant-cartel formation," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 241-257, February.
    4. Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-27, June.
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