Liquidation risks in the Rotemberg - Saloner implicit collusion model
نویسندگان
چکیده
We extend the Rotemberg-Saloner’s (1986) [Rotemberg, J., Saloner, G., 1986. A supergame-theoretic model of price wars during booms. American Economic Review 76:390–407] ‘‘implicit collusion’’ framework to the consideration of capital market imperfections, captured by a non-zero probability of liquidation of firms in recessionary periods. We show that the Rotemberg-Saloner result of countercyclical markups is quite robust to the extension and, moreover, liquidation risks may even strengthen the degree of markup countercyclicality. 1999 Elsevier Science S.A. All rights reserved.
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