Does cooperation in manufactoring foster tacit collusion
AbstractThis paper analyzes the effect of cooperation in manufacturing on firms' inclination to collude in the market. Compared to non-cooperation in manufacturing, coordination of the investments in production yields a higher competitive profit. If firms intensify cooperation and produce in a joint plant, this profit is still higher due to lower investment costs. Since firms return to competition after a defection from the collusive agreement, a high competitive profit implies a weak punishment. Collusion is thus more difficult, the closer firms cooperate in manufacturing. Moreover, given competition or collusion in the market, joint production yields the highest profit and welfare. --
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Bibliographic InfoPaper provided by University of Tübingen, School of Business and Economics in its series Tübinger Diskussionsbeiträge with number 261.
Date of creation: 2003
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More information through EDIRC
): Manufacturing; Cooperative production; Dynamic competition; Collusion;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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