Excess Capacity and Collusion
AbstractIn this paper, the authors analyze a restricted class of equilibria in the dynamic model of J. P. Benoit and V. Krishna (1987) in which firms choose their scale of operation before engaging in a repeated game of price competition. Benoit and Krishna established that all firms carry excess capacity in all collusive equilibria. As the authors are interested in the relationship between excess capacity and collusion in price, they examine equilibria in which firms tacitly collude in price, but not in investment decisions. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 675.
Date of creation: Apr 1984
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- Osborne, Martin J. & Pitchik, Carolyn, 1983.
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- Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences.
- Brock, William A & Scheinkman, Jose A, 1985. "Price Setting Supergames with Capacity Constraints," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 371-82, July.
- James A. Brander & Richard Harris, 1983. "Anticipated Collusion and Excess Capacity," Working Papers 530, Queen's University, Department of Economics.
- Dixit, Avinash, 1979.
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140, University of Warwick, Department of Economics.
- Dilip Abreu & David G. Pearce & Ennio Stacchetti, 1984. "Optimal Cartel Equilibria with Imperfect Monitoring," Cowles Foundation Discussion Papers 726, Cowles Foundation for Research in Economics, Yale University.
- Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
- B. Curtis Eaton & Richard G. Lipsey, 1981.
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The RAND Corporation, vol. 12(2), pages 593-604, Autumn.
- Esposito, Frances Ferguson & Esposito, Louis, 1974. "Excess Capacity and Market Structure," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 188-94, May.
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