Cartel Formation and Managerial Incentives
نویسنده
چکیده
We study the formation of cartels within two di¤erent contexts. First, we consider internal-external stability based models which, due to rms free-riding incentives, lead to the inexistence of stable cartels. Second, we introduce the dynamic aspect of coalition formation. That is, when considering a cartel we consider also any cartel that can be reached through a succession of moves. Despite rms free-riding incentive, the dynamic process predicts that the collusion of the whole industry can occur with some regularity. We show that free-riding incentives decrease and incentives to merge increase when rmsowner delegate production decisions to managers. JEL Classi cation: L22, C72.
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