Cartel Stability and Product Differentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?
This article analyses how the degree of product differentiation, the size of the cartel and the size of the industry affect the stability of a cartel formed by any number of firms in an industry of any size. The paper considers a supergame-theoretic model to define stability. After a non-loyal member leaves the cartel, two possible reactions by the remaining members of the cartel are assumed. The first one is a trigger strategy where the cartel dissolves after one member has left and the second is one where the cartel keeps acting as a cartel with one member less.
|Date of creation:||2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/
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.:
- R. Rothschild, 1997. "Product differentiation and cartel stability: Chamberlin versus Hotelling," The Annals of Regional Science, Springer, vol. 31(3), pages 259-271.
- Hackner, Jonas, 1994. "Collusive pricing in markets for vertically differentiated products," International Journal of Industrial Organization, Elsevier, vol. 12(2), pages 155-177, June.
- Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
- Eaton, Curtis & Eswaran, Mukesh, 1998. "Endogenous Cartel Formation," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 1-13, March.
- Donsimoni, Marie-Paule, 1985. "Stable heterogeneous cartels," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 451-467, December.
- 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 317-27, June.
- d'ASPREMONT, Claude & JACQUEMIN, Alexis & GABSZEWICZ, Jean J. & WEYMARK, John A., .
"On the stability of collusive price leadership,"
CORE Discussion Papers RP
-522, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Lambertini, Luca, 1996.
"Cartel Stability and the Curvature of Market Demand,"
Bulletin of Economic Research,
Wiley Blackwell, vol. 48(4), pages 329-34, October.
- Luca Lambertini, 1994. "Cartel Stability and the Curvature of Market Demand," Working Papers 211, Dipartimento Scienze Economiche, Universita' di Bologna.
- Tom Ross, 1990.
"Cartel Stability And Product Differentiation,"
Carleton Industrial Organization Research Unit (CIORU)
90-04, Carleton University, Department of Economics.
- Chang, Myong-Hun, 1991. "The effects of product differentiation on collusive pricing," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 453-469, September.
- Friedman, James W, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 1-12, January.
When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:556. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Neal)
If references are entirely missing, you can add them using this form.