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Cheikbossian, Guillaume
and Mahenc, Philippe
(2018)
On the Difficulty of Collusion in the Presence of a More Efficient Outsider.
Journal of Institutional and Theoretical Economics, 174 (4).
pp. 595-628.
This is the latest version of this item.
Abstract
We study the ability of several identical firms to collude in the presence of a more efficient firm, which does not take part in their collusive agreement. The cartel firms adopt stick-and-carrot strategies, while the efficient firm plays its one-period best-response function, regardless of the history of play. We characterize the most collusive symmetric punishment, which maximizes the scope for collusion. We then find that either a lower cost disadvantage or a smaller cartel size facilitates collusion. Finally, we compare our results with those obtained in the standard setup where all firms participate in the collusive agreement.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | December 2018 |
| Refereed: | Yes |
| Uncontrolled Keywords: | Repeated Game, Tacit Collusion, Optimal Punishments, Cost Asymmetry, Outsider |
| JEL Classification: | C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games D43 - Oligopoly and Other Forms of Market Imperfection L13 - Oligopoly and Other Imperfect Markets |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 23 May 2018 06:25 |
| Last Modified: | 02 Apr 2021 15:57 |
| OAI Identifier: | oai:tse-fr.eu:32677 |
| URI: | https://publications.ut-capitole.fr/id/eprint/26024 |
Available Versions of this Item
-
Cooperation in the Presence of an Advantaged Outsider. (deposited 09 Jul 2014 17:34)
- On the Difficulty of Collusion in the Presence of a More Efficient Outsider. (deposited 23 May 2018 06:25) [Currently Displayed]
