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The size of stable cartels: An analytical approach

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  • Zu, Lei
  • Zhang, Jin
  • Wang, Shouyang

Abstract

In this paper, we revisit the size of stable cartels in a symmetric oligopoly model with a Cournot fringe. Konishi and Lin (1999) make a conjecture on the size of stable cartels. Due to algebra complexity, they test the conjecture by conducting numerical simulations. We provide an analytical approach to determine the size of stable cartels, and show that the size of stable cartels is slightly larger than the one in their conjecture. Furthermore, we find that the uniqueness of the stable cartel in Konishi and Lin (1999) could not always hold.

Suggested Citation

  • Zu, Lei & Zhang, Jin & Wang, Shouyang, 2012. "The size of stable cartels: An analytical approach," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 217-222.
  • Handle: RePEc:eee:indorg:v:30:y:2012:i:2:p:217-222
    DOI: 10.1016/j.ijindorg.2011.09.003
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    References listed on IDEAS

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    1. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, May.
    2. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    3. Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-327, June.
    4. Prokop, Jacek, 1999. "Process of dominant-cartel formation," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 241-257, February.
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    Cited by:

    1. Odenkirchen, Johannes, 2017. "Pricing Behavior of Cartel Outsiders in Incomplete Cartels," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168309, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Cartel stability; Uniqueness; Oligopoly; Cournot fringe;

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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