On endogenous cartel size under tacit collusion
AbstractWe analyze how the size of a cartel affects the possibility to sustain a collusive agreement. We develop a multi-period oligopoly model with homogeneous, quantity-setting firms, a subset of which are assumed to collude, while the remaining (fringe) firms choose their output levels noncooperatively. We show that, in our model, collusion is easier to sustain the larger the cartel is. The implications of this result on the incentives of firms to participate in a cartel are analyzed. We obtain that a firm is only willing to collude when otherwise collusion cannot be sustained.
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Bibliographic InfoArticle provided by Fundación SEPI in its journal Investigaciones Económicas.
Volume (Year): 32 (2008)
Issue (Month): 3 (September)
Contact details of provider:
Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
Web page: http://www.fundacionsepi.es/
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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- Pedro Mendi & Róbert F. Veszteg, .
"Sustainability of Collusion: Evidence from the Late 19th Century Basque Iron and Steel Industry,"
Faculty Working Papers
04/07, School of Economics and Business Administration, University of Navarra.
- Pedro Mendi & Róbert F. Veszteg, 2009. "Sustainability of collusion: evidence from the late 19th century basque iron and steel industry," Investigaciones Economicas, Fundación SEPI, vol. 33(3), pages 385-405, September.
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