Preliminary communication

ON COLLUSION SUSTAINABILITY WITH STACKED REVERSION

Marc Escrihuela Villar
Jorge Guillen

Abstract

We consider a multi-period oligopoly model to analyze cartel sustainability where a subset of
collusive firms is exogenously given. We assume that in case of cheating only the cheater is
expelled from the cartel and collusion continues without the cheater. We show that, in our
model, when firms compete in quantities and the cartel is sufficiently small, a Stackelberg
leader cartel can always be sustained if firms are patient enough. Furthermore, in this case
collusion is more easily sustained than when firms play grim trigger strategies. The opposite
result is obtained in a price-setting supergame with differentiated products.

Keywords

Collusion; Stacked reversion; Trigger strategies

Hrčak ID:

70513

URI

https://hrcak.srce.hr/70513

Publication date:

1.6.2011.

Article data in other languages: croatian

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