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On the Tacit Collusion Equilibria of an Investment Timing Game

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  • Richard Ruble

    () (EMLYON Business School, Ecully, F-69134, France)

  • Bruno Versaevel

    () (EMLYON Business School, Ecully, F-69134, France; and GATE, CNRS, Ecully, F-69130)

Abstract

This note further characterizes the tacit collusion equilibria in the investment timing game of Boyer, Lasserre and Moreaux [1]. Tacit collusion equilibria may or may not exist, and when they do may involve either finite time investments (type 1) or infinite delay (type 2). The relationship between equilibria and common demand forms is not immediately apparent. We provide the full necessary and sufficient conditions for existence. A simple condition on demand primitives is derived that determines the type of equilibria. Common demand forms are then shown to illustrate both finite-time and infinite-delay tacit collusion.

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Bibliographic Info

Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 0834.

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Length: 11 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:gat:wpaper:0834

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Keywords: Real options; Duopoly; Collusion; Investment;

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  1. Marcel Boyer & Pierre Lasserre & Michel Moreaux, 2007. "The Dynamics of Industry Investments," CIRANO Working Papers 2007s-09, CIRANO.
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