Demand Uncertainty Leads to Diverse Collusive Dynamics
نویسندگان
چکیده
We study collusive pricing in duopoly with uncertain demand and exogenous capacity constraints. In this setting, collusion using only symmetric pricing can limit collusive pro ts. We nd that using asymmetric pricing in some demand states permits higher sustainable collusive pro ts over the entire range of demand states. Consequently, we show joint pro t maximizing collusion can include both symmetric and two distinct types of asymmetric pricing on one equilibrium pricing path. Further, we derive conditions such that asymmetric pricing in a given state increases each rms individual discounted expected future pro ts. Keywords: Demand Uncertainty; Collusion; Asymmetric Pricing; Capacity Constraints. JEL Classi cations: L11, L12, L13. Knittel: William Barton Rogers Professor of Energy Economics, Sloan School of Management, MIT and NBER. Lepore: (corresponding author email: [email protected]) Department of Economics, Orfalea College of Business, California Polytechnic State University, San Luis Obispo. Shafran: Department of Economics, Orfalea College of Business, California Polytechnic State University, San Luis Obispo.
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