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Collusion sustainability with optimal punishments and detection lags, with an application to a Cournot game

Author

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  • Aitor Ciarreta
  • Carlos Gutiérrez-Hita

Abstract

In this paper we characterize optimal punishments with detection lags when the market consists of n oligopolistic firms that compete à la Cournot. It is shown how in the presence of detection lags optimal punishments fail to restore cooperation as long as the number of lags increases. Moreover, collusion sustainability is difficult to achieve also if the number of firms is low.

Suggested Citation

  • Aitor Ciarreta & Carlos Gutiérrez-Hita, 2013. "Collusion sustainability with optimal punishments and detection lags, with an application to a Cournot game," Estudios de Economia, University of Chile, Department of Economics, vol. 40(2 Year 20), pages 247-254, December.
  • Handle: RePEc:udc:esteco:v:40:y:2013:i:2:p:247-254
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    File URL: http://www.estudiosdeeconomia.cl/publicacion/show/id/1419
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    More about this item

    Keywords

    Optimal punishments; detection lags; collusion sustainability.;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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