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(Un)stable vertical collusive agreements

Author

Listed:
  • Jean J. Gabszewicz

    (CORE, Université Catholique de Louvain, Belgique)

  • Skerdilajda Zanaj

    (CREA, Université du Luxembourg)

Abstract

In this paper, we extend the concept of stability to vertical collusive agreements, involving downstream and upstream firms, using a setup of successive Cournot oligopolies. We show that a stable vertical agreement always exists: the unanimous vertical agreement involving all downstream and upstream firms. Thus, stable vertical collusive agreements exist even for market structures in which horizontal cartels would be unstable. We also show that there are economies for which the unanimous agreement is not the only stable one.

Suggested Citation

  • Jean J. Gabszewicz & Skerdilajda Zanaj, 2013. "(Un)stable vertical collusive agreements," DEM Discussion Paper Series 13-12, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:13-12
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    File URL: https://hdl.handle.net/10993/4611
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    Cited by:

    1. RUSSO, Federica & MOUCHART, Michel & WUNSCH, Guillaume, 2013. "Confounding and control in a multivariate system. An issue in causal attribution," LIDAM Discussion Papers CORE 2013068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Jean J. Gabszewicz & Skerdilajda Zanaj, 2015. "(Un)stable vertical collusive agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(3), pages 924-939, August.
    3. DI SUMMA, Marco, 2013. "The convex hull of the all-different system with the inclusion property: a simple proof," LIDAM Discussion Papers CORE 2013069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. François Maniquet & Massimo Morelli, 2015. "Approval quorums dominate participation quorums," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(1), pages 1-27, June.
    5. Cristina Pardo-Garcia & Jose Sempere-Monerris, 2015. "Equilibrium mergers in a composite good industry with efficiencies," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(1), pages 101-127, March.

    More about this item

    Keywords

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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

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