Cartel Size and Collusive Stability with Non-Capitalistic Players
A well established belief both in the game-theoretic IO and in policy debates is that market concentration facilitates collusion. We show that this piece of conventional wisdom relies upon the assumption of profit-seeking behaviour, for it may be reversed when firms pursue other plausible goals. To illustrate our intuition, we investigate the incentives to tacit collusion in an industry formed by Labor-Managed (LM) enterprises. We characterize the perfect equilibrium of a supergame in which LM firms play an infinitely repeated Cournot game. We show that the critical threshold of the discount factor above which collusion is stable (i) is lower in the LM industry than in the capitalistic one; (ii) monotonically decreases with the number of firms.
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- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
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- Flavio DELBONO & Carlo REGGIANI, 2013.
"Cooperative Firms And The Crisis: Evidence From Some Italian Mixed Oligopolies,"
Annals of Public and Cooperative Economics,
Wiley Blackwell, vol. 84(4), pages 383-397, December.
- F. Delbono & C. Reggiani, 2013. "Cooperative firms and the crisis: evidence from some Italian mixed oligopolies," Working Papers wp884, Dipartimento Scienze Economiche, Universita' di Bologna.
- Ivaldi, Marc & Jullien, Bruno & Rey, Patrick & Seabright, Paul & Tirole, Jean, 2003. "The Economics of Tacit Collusion," IDEI Working Papers 186, Institut d'Économie Industrielle (IDEI), Toulouse.
- Hill, Martyn & Waterson, Michael, 1983. "Labor-managed Cournot oligopoly and industry output," Journal of Comparative Economics, Elsevier, vol. 7(1), pages 43-51, March. Full references (including those not matched with items on IDEAS)
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