Collusion and Durability
AbstractWe make the observation that cartels which produce goods with lower durability are easier to sustain implicitly. This observation generates the following results: 1) implicit cartels have an incentive to produce goods with an inefficiently low level of durability; 2) a monopoly or explicit cartel is welfare superior to an implicit cartel; 3) welfare is non--monotonic in the number of firms; 4) a regulator may demand inefficiently high levels of durability to prevent collusion.
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Date of creation: 01 Jun 2007
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- Strausz, Roland & Sasaki, Dan, 2008. "Collusion and Durability," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 246, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-09-16 (All new papers)
- NEP-COM-2006-09-16 (Industrial Competition)
- NEP-IND-2006-09-16 (Industrial Organization)
- NEP-KNM-2006-09-16 (Knowledge Management & Knowledge Economy)
- NEP-MIC-2006-09-16 (Microeconomics)
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- Oliver Gürtler, 2008. "Implicit contracting with a (potentially) reliable agent," Journal of Economics, Springer, vol. 94(2), pages 177-189, July.
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