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Cartels with Homogeneous and Differentiated Products and Imperfect Monitoring

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  • Tedeschi, Piero

Abstract

In this paper, two simple oligopoly models are considered: the first with homogeneous and the second with differentiated products. Differently from previous contributions, this paper shows that, with imperfect monitoring, there exists a sequence of symmetric strategy profiles (with stochastic punishment) that are Bayesian perfect equilibria and whose expected present value approaches the optimal cartel one, with the desired level of approximation, as the discount factor converges to one. The strategy is similar to that proposed in 1984 by E. J. Green and R. H. Porter but has a smooth structure and, in general, it allows for higher profits. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Tedeschi, Piero, 1994. "Cartels with Homogeneous and Differentiated Products and Imperfect Monitoring," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 635-656, August.
    • Handle: RePEc:ier:iecrev:v:35:y:1994:i:3:p:635-56
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    Cited by:

    1. Péter Benczúr & Cosmin L. Ilut, 2016. "Evidence for Relational Contracts in Sovereign Bank Lending," Journal of the European Economic Association, European Economic Association, vol. 14(2), pages 375-404.
    2. Peter Benczur & Cosmin Ilut, 2011. "Evidence for Dynamic Contracts in Sovereign Bank Lending," Working Papers 11-06, Duke University, Department of Economics.
    3. Chrysanthos Dellarocas, 2006. "How Often Should Reputation Mechanisms Update a Trader's Reputation Profile?," Information Systems Research, INFORMS, vol. 17(3), pages 271-285, September.

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