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Delegation and Cartel Stability

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  • L. Lambertini

Abstract

The effect of delegation on cartel stability is addressed in a duopoly for a homogeneous product, under Cournot competition. The main findings are that if only one firm is managerial, the critical discount factor is increased by the presence of a weight attached to sales, so that cartel stability is decreased, while if both are managerial the opposite holds. As a consequence, the inclusion of sales in both firms objective function represents an incentive towards collusion.

Suggested Citation

  • L. Lambertini, 1994. "Delegation and Cartel Stability," Working Papers 208, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:208
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