Action Timing as a Collusive Common Good
Frequent revision of firms' actions facilitates to sustain tacit collusion. Even when some, not all, firms revise their actions with enhanced frequency, the change contributes positively to collusive sustainability, i.e., lowering the critical discount factor. In this sense, the added frequency in revising actions can be viewed as a common good shared among oligopolists. Particularly noteworthy is the fact that, in a large class of environments, a firm's deviation can be deterred by no more than one punisher, implying that at most two firms need to invest in frequent revision in order to sustain collusion.
|Date of creation:||Mar 2005|
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