Stable Commitment in an Intertemporal Collusive Trade
AbstractThis study presents a more general collusive mechanism that is sustainable in an oligopolistic repeated game. In this setup, firms can obtain average payoffs beyond the cooperative profits while at the same time improve consumer welfare through a lower market price offer. In particular, we introduce here the notion of intertemporal collusive trade where each oligopolist, apart from regularly producing the normal cooperative output, is also allowed in a systematic way to earn higher than the rest at some stages of the game. This admits subgame- perfection and is shown under some conditions to be Pareto-superior to the typical cooperative outcome.
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Bibliographic InfoPaper provided by University of the Philippines School of Economics in its series UP School of Economics Discussion Papers with number 201301.
Length: 34 pages
Date of creation: Feb 2013
Date of revision:
Publication status: Published as UPSE Discussion Paper No. DP 2013-01, February 2013
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-COM-2013-05-22 (Industrial Competition)
- NEP-MIC-2013-05-22 (Microeconomics)
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