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Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry

Listed author(s):
  • Levenstein, Margaret C

Between 1885 and 1914, U.S. bromine producers colluded to raise prices and profits. This collusion was disrupted by price wars. Bromine price wars are compared with the Green-Porter (1984) and Abreu-Pearce-Stacchetti (1986) models. Some price wars resulted from the imperfect monitoring problems which motivate these models. Several empirical implications of the Abreu-Pearce-Stacchetti model are borne out but the bromine industry's price wars were generally milder than contemplated by their model. More severe price wars were part of a bargaining process in which firms tried to force renegotiation to a new collusive equilibrium with a different distribution of rents. Copyright 1997 by Blackwell Publishing Ltd

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Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 45 (1997)
Issue (Month): 2 (June)
Pages: 117-137

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Handle: RePEc:bla:jindec:v:45:y:1997:i:2:p:117-37
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