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Inefficiency in Repeated Cournot Oligopoly Games

Author

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  • Harrison Cheng

Abstract

A widely accepted view says that Folk Theorem holds in the repeated Cournot oligopoly games with imperfect price signals satisfying generic conditions. We show that this view is not justi- fied. We argue that maintaining asymptotic joint monopoly outcome is not possible with noisy price signals. When firms have the choice of increasing outputs at equilibrium as a deviation strategy, it is not possible to maintain such collusive outcome, even if the discount rate is close to 1.

Suggested Citation

  • Harrison Cheng, 2005. "Inefficiency in Repeated Cournot Oligopoly Games," IEPR Working Papers 05.12, Institute of Economic Policy Research (IEPR).
    • Handle: RePEc:scp:wpaper:05-12
    as

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    More about this item

    Keywords

    Oligopoly; ineffciency; repeated games; imperfect price signal; Folk Theorem;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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