Forward trading and collusion in oligopoly

نویسندگان

  • Matti Liski
  • Juan-Pablo Montero
چکیده

We consider an infinitely repeated oligopoly in which at each period firms not only serve the spot market by either competing in prices or quantities but also have the opportunity to trade forward contracts. Contrary to the pro-competitive results of finite-horizon models, we find that the possibility of forward trading allows firms to sustain collusive profits that otherwise would not be possible to achieve. The result holds both for price and quantity competition and follows because (collusive) contracting of future sales is more effective in deterring deviations from the collusive plan than inducing the previously identified pro-competitive effects. © 2005 Elsevier Inc. All rights reserved. JEL classification: G13; L12; L13; L50

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Analyzing Capacity Withholding in Oligopoly Electricity Markets Considering Forward Contracts and Demand Elasticity

In this paper capacity withholding in an oligopolistic electricity market that all Generation Companies (GenCos) bid in a Cournot model is analyzed and the capacity withheld index, the capacity distortion index and the price distortion index are obtained and formulated. Then a new index, Distortion-Withheld Index (DWI), is proposed in order to measure the potential ability of market for capacit...

متن کامل

Tacit Collusion in Oligopoly∗

We examine the economics literature on tacit collusion in oligopoly markets and take steps toward clarifying the relation between economists’ analysis of tacit collusion and those in the legal literature. We provide an example to motivate the idea that collusive profits can be achieved via tacit coordination in an environment where there is a unique, salient way for colluders to maximize and di...

متن کامل

Renegotiation in Repeated Oligopoly Interaction

Standard repeated-interaction theories of oligopoly make collusion seem much easier than a \structural consensus" suggests that it is. I show that more intuitive results can emerge if colluders could renegotiate after a deviation. In repeated Bertrand oligopoly, if agreements are subject to a certain kind of frictionless renegotiation, then full collusion is impossible with more than three rms,...

متن کامل

A Game theoretic model for generation capacity adequacy: Comparison between investment incentive mechanisms in electricity markets

In this paper we study the problem of long-term capacity adequacy in electricity markets. We implement a dynamic model in which firms compete for investment and electricity production under imperfect Cournot competition. The main aim of this work is to compare three investment incentive mechanisms: reliability options, forward capacity market and capacity payments. Apart from the oligopoly case...

متن کامل

Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication

This paper studies collusion in repeated Bertrand oligopoly when stochastic demand levels for the product of each rm are their private information and are positively correlated. It derives general su cient conditions for e cient collusion through communication and a simple grim-trigger strategy. This analysis is then applied to a model where the demand signal has multiple random components whic...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

عنوان ژورنال:
  • J. Economic Theory

دوره 131  شماره 

صفحات  -

تاریخ انتشار 2006