Noncooperative Collusion in Durable Goods Oligopoly
AbstractCoase conjectured that a durable goods monopolist who can make offers to sell arbitrarily frequently will lose the ability to extract positive profits. This result, which has now been proved, can be attributed to the inability of the monopolist to commit to maintaining sufficiently high prices in the near future. For the case of durable-goods oligopoly, we show that letting the firms make offers arbitrarily frequently enhances their ability to commit to high prices and in the limit enables the firms to enjoy total market profits equal to the full commitment (one-shot) monopoly profit.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 18 (1987)
Issue (Month): 2 (Summer)
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Web page: http://www.rje.org
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