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Collusion and the elasticity of demand

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  • David Collie

    () (Cardiff Business School, Cardiff University)

Abstract

The analysis of collusion in infinitely repeated Cournot oligopoly games has generally assumed that demand is linear, but this note uses constant-elasticity demand functions to investigate how the elasticity of demand affects the sustainability of collusion.

Suggested Citation

  • David Collie, 2004. "Collusion and the elasticity of demand," Economics Bulletin, AccessEcon, vol. 12(3), pages 1-6.
  • Handle: RePEc:ebl:ecbull:eb-04l10003
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    References listed on IDEAS

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    1. Deneckere, R., 1983. "Duopoly supergames with product differentiation," Economics Letters, Elsevier, vol. 11(1-2), pages 37-42.
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    3. Lambertini, Luca, 1996. "Cartel Stability and the Curvature of Market Demand," Bulletin of Economic Research, Wiley Blackwell, vol. 48(4), pages 329-334, October.
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    5. Verboven, Frank, 1997. "Collusive behavior with heterogeneous firms," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 121-136, May.
    6. Albaek, Svend & Lambertini, Luca, 1998. "Collusion in differentiated duopolies revisited," Economics Letters, Elsevier, vol. 59(3), pages 305-308, June.
    7. Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June.
    8. Rajeev K. Tyagi, 1999. "On the relationship between product substitutability and tacit collusion," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(6), pages 293-298.
    9. Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
    10. Wernerfelt, Birger, 1989. "Tacit collusion in differentiated cournot games," Economics Letters, Elsevier, vol. 29(4), pages 303-306.
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    Citations

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    Cited by:

    1. Rodney Beard, 2015. "N-Firm Oligopoly With General Iso-Elastic Demand," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 336-345, October.
    2. Haldun Evrenk & E. Zenginobuz, 2010. "Regulation through a revenue contest," Journal of Economics, Springer, vol. 99(3), pages 211-237, April.
    3. Zimmerman, Paul R., 2010. "On the sustainability of collusion in Bertrand supergames with discrete pricing and nonlinear demand," MPRA Paper 20249, University Library of Munich, Germany.
    4. Baranes, Edmond & Poudou, Jean-Christophe, 2010. "Cost-based access regulation and collusion in a differentiated duopoly," Economics Letters, Elsevier, vol. 106(3), pages 172-176, March.
    5. Fabio Tramontana, 2013. "Information exchange in a Cournot duopoly with nonlinear demand function," DEM Working Papers Series 049, University of Pavia, Department of Economics and Management.
    6. Ciarreta Antuñano, Aitor & Gutiérrez Hita, Carlos, 2005. "Strategic Behavior and Collusion: An Application to the Spanish Electricity Market," DFAEII Working Papers 2005-02, University of the Basque Country - Department of Foundations of Economic Analysis II.
    7. Gallice, Andrea, 2010. "The neglected effects of demand characteristics on the sustainability of collusion," Research in Economics, Elsevier, vol. 64(4), pages 240-246, December.
    8. Fanti, Luciano & Gori, Luca & Sodini, Mauro, 2015. "Nonlinear dynamics in a Cournot duopoly with isoelastic demand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 108(C), pages 129-143.

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    More about this item

    Keywords

    cartel;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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