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On Prices' Cyclical Behaviour in Oligopolistic Markets

Author

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  • Luca Lambertini

    (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy)

  • Luigi Marattin

    (Department of Economics, University of Bologna, Italy)

Abstract

We revisit the discussion about the relationship between price's cyclical features, implicit collusion and the demand level in an oligopoly supergame where a positive shock may hit demand and disrupt collusion. The novel feature of our model consists in characterising the post-shock noncooperative price and comparing it against the cartel price played in the last period of the collusive path, to single out the conditions for procyclicality to arise both in the short and in the long-run.

Suggested Citation

  • Luca Lambertini & Luigi Marattin, 2016. "On Prices' Cyclical Behaviour in Oligopolistic Markets," Working Paper series 16-17, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:16-17
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    More about this item

    Keywords

    demand shocks; cyclical pricing; implicit collusion;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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