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Tacit Collusion in Price‐Setting Oligopoly: A Puzzle Redux

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  • Matt Van Essen
  • William B. Hankins

Abstract

We study tacit collusion in price‐setting duopoly games with strategic complements and substitutes. While this problem has been considered by several studies, this article sheds new light on the comparison by focusing on the relationship between dynamic stability of equilibrium and tacit collusion. We find when controlling for the absolute slope of the reaction functions, there are no robust differences in either the convergence properties or tacit collusion between complements and substitutes treatments.

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  • Matt Van Essen & William B. Hankins, 2013. "Tacit Collusion in Price‐Setting Oligopoly: A Puzzle Redux," Southern Economic Journal, John Wiley & Sons, vol. 79(3), pages 703-726, January.
    • Handle: RePEc:wly:soecon:v:79:y:2013:i:3:p:703-726
    DOI: 10.4284/0038-4038-2011.157
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