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(Un)stable vertical collusive agreements

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  • Jean J. Gabszewicz
  • Skerdilajda Zanaj

Abstract

In this paper, we extend the concept of stability to vertical collusive agreements involving downstream and upstream firms, using a setup of successive Cournot oligopolies. We show that a stable vertical agreement, the unanimous vertical agreement involving all downstream and upstream firms, always exists. Thus, stable vertical collusive agreements exist even for market structures in which horizontal cartels would be unstable. We also show that there are economies for which the unanimous agreement is not the only stable one. Furthermore, the Stigler statement according to which the only ones who benefit from a collusive agreement are the outsiders need not be valid in vertical agreements.

Suggested Citation

  • Jean J. Gabszewicz & Skerdilajda Zanaj, 2015. "(Un)stable vertical collusive agreements," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 924-939, August.
  • Handle: RePEc:cje:issued:v:48:y:2015:i:3:p:924-939
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    5. Jacques Drèze & Alain Durré & Jacques Drèze & Jean-François Carpantier, 2014. "Fiscal Integration and Growth Stimulation in Europe," Recherches économiques de Louvain, De Boeck Université, vol. 80(2), pages 5-45.
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    Cited by:

    1. VARDAR, N. Baris, 2013. "Imperfect resource substitution and optimal transition to clean technologies," CORE Discussion Papers 2013072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. DI SUMMA, Marco, 2013. "The convex hull of the all-different system with the inclusion property: a simple proof," CORE Discussion Papers 2013069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Jean J. Gabszewicz & Skerdilajda Zanaj, 2015. "(Un)stable vertical collusive agreements," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 924-939, August.
    4. Cristina Pardo-Garcia & Jose Sempere-Monerris, 2015. "Equilibrium mergers in a composite good industry with efficiencies," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(1), pages 101-127, March.
    5. RUSSO, Federica & MOUCHART, Michel & WUNSCH, Guillaume, 2013. "Confounding and control in a multivariate system. An issue in causal attribution," CORE Discussion Papers 2013068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. François Maniquet & Massimo Morelli, 2015. "Approval quorums dominate participation quorums," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(1), pages 1-27, June.
    7. BELLELFLAMME, Paul & BLOCH , Francis & ,, 2013. "Dynamic protection of innovations through patents and trade secrets," CORE Discussion Papers 2013059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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