Inefficiency in Repeated Cournot Oligopoly Games
A widely accepted view says that Folk Theorem holds in the repeated Cournot oligopoly games with imperfect price signals satisfying generic conditions. We show that this view is not justi- fied. We argue that maintaining asymptotic joint monopoly outcome is not possible with noisy price signals. When firms have the choice of increasing outputs at equilibrium as a deviation strategy, it is not possible to maintain such collusive outcome, even if the discount rate is close to 1.
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|Date of creation:||Jan 2005|
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Web page: http://www.usc.edu/dept/LAS/economics/IEPR/
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