IDEAS home Printed from https://ideas.repec.org/p/qed/wpaper/541.html
   My bibliography  Save this paper

Conscious Parallelism and Predatory Pricing in a Contestable Market

Author

Listed:
  • W. Bentley MacLeod

Abstract

This paper studies the "rationality" of conscious parallelism and predatory pricing in the context of a dynamic oligopoly model. The doctrine of conscious parallelism is modelled as the outcome of a signalling game in which the rules of response are specified axiomatically. This results in a unique solution based on firms' need to have consistent expectations the subsequently generate collusive behaviour. With free entry and exit, or contestibility, predatory pricing can deter entry. The solution concept used is subgame perfect Nash equilibria. In contrast to the contestable markets theory, not only is conscious parallelism and predatory pricing consistent with rational profit maximization, but this behaviour can also result in long-run positive profits even with costless entry and exit.

Suggested Citation

  • W. Bentley MacLeod, 1983. "Conscious Parallelism and Predatory Pricing in a Contestable Market," Working Paper 541, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:541
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qed:wpaper:541. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Babcock (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.