A note on cartel stability and endogenous sequencing with tacit collusion
We use the concept of cartel stability defined by d'Aspremont et al. (1983) to obtain that the sequence of play between the cartel and the fringe affects cartel stability in a quantity-competition setting where firms tacitly collude. We also prove that an endogenous sequence of play between a cartel and a fringe depends on the discount factor. If the discount factor is large enough, the cartel and the fringe simultaneously choose quantities since the stable cartel may contain more firms under simultaneous play than under cartel leadership. This is due to the fact that under simultaneous play cartel firms have incentives to participate in the cartel because otherwise no collusion is possible.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Edificio Gaspar Melchor de Jovellanos, Crta. de Valldemossa km 7,5, Palma 07122 (BALEARS)|
Web page: http://www.uib.es/depart/deaweb/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Albaek, Svend, 1990. "Stackelberg Leadership as a Natural Solution under Cost Uncertainty," Journal of Industrial Economics, Wiley Blackwell, vol. 38(3), pages 335-347, March.
- Sylvie Thoron, 1998. "Formation of a Coalition-Proof Stable Cartel," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 63-76, February.
- Morasch, Karl, 2000. "Strategic alliances as Stackelberg cartels - concept and equilibrium alliance structure," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 257-282, February.
- Thoron, Sylvie, 2004.
"Which acceptable agreements are equilibria?,"
Mathematical Social Sciences,
Elsevier, vol. 47(1), pages 111-134, January.
- Thoron, Sylvie, 2003. "Which Acceptable Agreements are Equilibria?," Royal Economic Society Annual Conference 2003 204, Royal Economic Society.
- Mailath George J., 1993. "Endogenous Sequencing of Firm Decisions," Journal of Economic Theory, Elsevier, vol. 59(1), pages 169-182, February.
- Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
- d'ASPREMONT, Claude & JACQUEMIN, Alexis & GABSZEWICZ, Jean J. & WEYMARK, John A., "undated". "On the stability of collusive price leadership," CORE Discussion Papers RP 522, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-327, June.
- James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
- Andrea Lofaro, 1999. "When imperfect collusion is profitable," Journal of Economics, Springer, vol. 70(3), pages 235-259, October.
- Robson, Arthur J, 1990. "Stackelberg and Marshall," American Economic Review, American Economic Association, vol. 80(1), pages 69-82, March.
- Davidson, Carl & Deneckere, Raymond, 1984. "Horizontal mergers and collusive behavior," International Journal of Industrial Organization, Elsevier, vol. 2(2), pages 117-132, June.
- Sherrill Shaffer, 1990. "Stable cartels with a Cournot fringe," Working Papers 90-24, Federal Reserve Bank of Philadelphia.
- Sherrill Shaffer, 1993. "Stable cartels with a Cournot fringe," Working Papers 93-8, Federal Reserve Bank of Philadelphia.
- Margaret C. Levenstein & Valerie Y. Suslow, 2002. "What Determines Cartel Success?," UMASS Amherst Economics Working Papers 2002-01, University of Massachusetts Amherst, Department of Economics.
- Effrosyni Diamantoudi, 2005. "Stable cartels revisited," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 907-921, November.
- Reinhard Selten, 1973. "A Simple Model of Imperfect Competition, where 4 are Few and 6 are Many," Center for Mathematical Economics Working Papers 008, Center for Mathematical Economics, Bielefeld University.
- Selten, Reinhard, 2017. "A simple model of imperfect competition, where 4 are few and 6 are many," Center for Mathematical Economics Working Papers 8, Center for Mathematical Economics, Bielefeld University.
- Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July. Full references (including those not matched with items on IDEAS)