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On the Tacit Collusion Equilibria of an Investment Timing Game

Author

Listed:
  • Richard Rubble

    (EMLYON RECHERCHE - EMLYON Business School)

  • Bruno Versaevel

    () (EMLYON RECHERCHE - EMLYON Business School, GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

Abstract

This note further characterizes the tacit collusion equilibria in the investment timing game of Boyer, Lasserre and Moreaux [1]. Tacit collusion equilibria may or may not exist, and when they do may involve either finite time investments (type 1) or infinite delay (type 2). The relationship between equilibria and common demand forms is not immediately apparent. We provide the full necessary and sufficient conditions for existence.A simple condition on demand primitives is derived that determines the type of equilibria. Common demand forms are then shown to illustrate both finite-time and infinite-delay tacit collusion.

Suggested Citation

  • Richard Rubble & Bruno Versaevel, 2008. "On the Tacit Collusion Equilibria of an Investment Timing Game," Post-Print halshs-00373952, HAL.
  • Handle: RePEc:hal:journl:halshs-00373952
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00373952
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    1. Marcel Boyer & Pierre Lasserre & Michel Moreaux, 2007. "The Dynamics of Industry Investments," CIRANO Working Papers 2007s-09, CIRANO.
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    Keywords

    Real options; Duopoly; Collusion; Investment;

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