Cartel Stability with Time-dependent Detection Probabilities
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چکیده
منابع مشابه
Cartel Stability with Time-dependent Detection Probabilities
To account for the illegal nature of price-fixing agreements, detection probabilities are introduced in a dynamic oligopoly. For a trigger strategy to sustain a non-cooperative collusive equilibrium as a SPNE both the discount rate and all per-period detection probabilities must be ‘low’. The domain reduces for which the strictest IC constraint is binding if (i) any per-period detection probabi...
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The condition is derived for Friedman’s trigger strategy to sustain a collusive market equilibrium as a noncooperative Nash equilibrium given subjective beliefs as to the antitrust authority’s ability of succesfully disolving the illegal cartel.
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An increase in cartel discovery probability due to irregular price movements that result from cartel defection is shown to increase cartel stability as short-run defection profits are less likely to be earned.
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Manuscript No: #8529, Acceptance date: November 30, 1999 Trade liberalization and cartel stability* Kjell Erik Lommerud Lars Sørgard RRH: TRADE LIBERALIZATION AND CARTEL STABILITY LRH: Kjell Erik Lommerud and Lars Sørgard Abstract Can reduced trade barriers promote a collusive understanding about not exporting into each others domestic markets? Reduced trade costs increase the short-run gains f...
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This paper investigates the effect of economic integration on the ability of firms to maintain a collusive understanding about staying out of each other’s markets. The paper distinguishes among different types of trade costs: ad valorem, unit, fixed. It is shown that for a sufficient reduction of ad valorem trade costs, a cartel supported by collusion on either quantities or prices will be weak...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2003
ISSN: 1556-5068
DOI: 10.2139/ssrn.488662