Cartel stability and profits under different reactions to entry in markets with growing demand
We study sustainability of collusion with optimal penal codes, in markets where demand growth may trigger the entry of a new firm. In contrast with grim trigger strategies, optimal penal codes make collusion easier to sustain before entry than after. We compare different reactions of the incumbents to entry in terms of: sustainability of collusion, incumbent’s profits, entrant’s profits, consumer surplus and social welfare. Surprisingly, the incumbent firms may prefer competition to collusion.
|Date of creation:||Mar 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.fep.up.pt/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carlos Seixas & António Brandão & Manuel Luís Costa, 2013. "Policy Choices by an Incumbent - A Case with Down-Up Problem, Bias Beliefs and Retrospective Voting," FEP Working Papers 485, Universidade do Porto, Faculdade de Economia do Porto.
- Ana Paula Ribeiro & Paula Gracinda Teixeira Santos & Vitor Carvalho, 2013.
"Export-led growth in Europe: Where and what to export?,"
- Paula Gracinda Santos & Ana Paula Ribeiro & Vitor Manuel Carvalho, 2013. "Export-led growth in Europe: Where and what to export?," FEP Working Papers 479, Universidade do Porto, Faculdade de Economia do Porto.
- Martin A. Lariviere & V. Padmanabhan, 1997. "Slotting Allowances and New Product Introductions," Marketing Science, INFORMS, vol. 16(2), pages 112-128.
- Hélder Ferreira & Aurora A.C. Teixeira, 2013. "‘Welcome to the experience economy’: assessing the influence of customer experience literature through bibliometric analysis," FEP Working Papers 481, Universidade do Porto, Faculdade de Economia do Porto.
- Ana Carina Araújo & Aurora A.C. Teixeira, 2013. "Determinants of international technology transfer: an empirical analysis of the Enterprise Europe Network," FEP Working Papers 480, Universidade do Porto, Faculdade de Economia do Porto.
- Sochirca, Elena & Gil, Pedro Mazeda & Afonso, Oscar, 2014.
"Technology structure and skill structure: Costly investment and complementarity effects quantification,"
Journal of Macroeconomics,
Elsevier, vol. 40(C), pages 172-189.
- Elena Sochirca & Pedro Mazeda Gil & Oscar Afonso, 2013. "Technology Structure and Skill Structure: Costly Investment and Complementarity Effects Quantification," FEP Working Papers 478, Universidade do Porto, Faculdade de Economia do Porto.
- Márcia Oliveira & Dalila B. M. M. Fontes & Teresa Pereira, 2013. "Multicriteria Decision Making: A Case Study in the Automobile Industry," FEP Working Papers 483, Universidade do Porto, Faculdade de Economia do Porto.
- Ana P. Borges & Didier Laussel & João Correia-da-Silva, 2013.
"Multidimensional screening with complementary activities: regulating a monopolist with unknown cost and unknown preference for empire-building,"
FEP Working Papers
486, Universidade do Porto, Faculdade de Economia do Porto.
- Ana Pinto Borges & Didier Laussel & João Correia-da-Silva, 2013. "Multidimensional Screening with Complementary Activities: Regulating a Monopolist with Unknown Cost and Unknown Preference for Empire Building," Games, MDPI, Open Access Journal, vol. 4(3), pages 532-560, September.
- Linnemer, Laurent, 2002. "Price and advertising as signals of quality when some consumers are informed," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 931-947, September.
When requesting a correction, please mention this item's handle: RePEc:por:fepwps:487. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.