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Tacit Collusion in Price-Setting Oligopoly: A Puzzle Redux


  • Matt Van Essen

    () (Department of Economics, Finance, and Legal Studies, University of Alabama,, 200 Alston Hall, Box 870224, Tuscaloosa, AL 35487; corresponding author.)

  • William B. Hankins

    () (Department of Economics, Finance, and Legal Studies, University of Alabama, 200 Alston Hall, Box 870224, Tuscaloosa, AL 35487;)


We study tacit collusion in price-setting duopoly games with strategic complements and substitutes. While this problem has been considered by several studies, this article sheds new light on the comparison by focusing on the relationship between dynamic stability of equilibrium and tacit collusion. We find when controlling for the absolute slope of the reaction functions, there are no robust differences in either the convergence properties or tacit collusion between complements and substitutes treatments.

Suggested Citation

  • Matt Van Essen & William B. Hankins, 2013. "Tacit Collusion in Price-Setting Oligopoly: A Puzzle Redux," Southern Economic Journal, Southern Economic Association, vol. 79(3), pages 703-726, January.
  • Handle: RePEc:sej:ancoec:v:79:3:y:2013:p:703-726
    DOI: 10.4284/0038-4038-2011.157

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General


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