Munich Personal RePEc Archive

The collusion incentive constraint

Huric Larsen, Jesper Fredborg (2014): The collusion incentive constraint.

[img]
Preview
PDF
MPRA_paper_58449.pdf

Download (93kB) | Preview

Abstract

The collusion incentive constraint is an important economic measure of cartel stability. It weighs the profits of being in a cartel with those of cheating and punishment of the remaining cartel members. The constraint places no restrictions on firm cartel, cheating and punishment pricing, but is usually considered in a restricted competitive set up characterized by either Cournot or Bertrand competition. This paper examines the constraint under Bertrand competition and homogenous goods when assuming that cartel members have the same market power and then continues to examine if this is not so.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.