The Comparative Statics of Collusion Models
AbstractWe develop and illustrate a methodology for obtaining robust comparative statics results for collusion models in markets with differentiated goods by analyzing the homogeneous goods limit of these models. This analysis reveals that the impact of parameter changes on the incentives to deviate from collusion and the punishment profits are often of different order of magnitude yielding comparative statics results that are robust to the functional form of the demand system. We demonstrate with numerical calculations that these limiting results predict the global comparative statics at any degree of product differentiation. We use this methodology to demonstrate the non-robustness of Nash reversion equilibria and to develop new results in the comparative statics of collusion.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5742.
Date of creation: Jul 2006
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- 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
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- Nocke, Volker & White, Lucy, 2010.
"Vertical merger, collusion, and disruptive buyers,"
International Journal of Industrial Organization,
Elsevier, vol. 28(4), pages 350-354, July.
- Kühn, Kai-Uwe, 2006. "How Market Fragmentation Can Facilitate Collusion," CEPR Discussion Papers 5948, C.E.P.R. Discussion Papers.
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