A Stochastic Cartel Market Process
A dynamic version of discrete choice theory is presented in order to enable the explicit analysis of the interaction between the micro- and the macro-level of social systems. Suppliers in a cartel market face a social dilemma. They are modelled as boundedly rational decision makers with limited foresight.A stimulus-response mechanism leads to an ergodic, time-discrete Markov-chain with a discrete state space. The resulting market dynamics exhibits a specific time-pattern of cartelisation and de-cartelisation. Most of the time, a cartel which significantly rations output is in existence. This happens though there is a permanent temptation to free ride.
|Date of creation:||05 Jul 2000|
|Date of revision:|
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