Kinked Norms of Behaviour and Cooperation

Currarini, Sergio and Marini, Marco A. (2011): Kinked Norms of Behaviour and Cooperation. Published in: Economics Letters , Vol. 110, No. 3 (10 January 2011): pp. 223-225.

Abstract

This paper revisits a particular norm of behaviour underlying the well known model of kinked demand. We show that under some standard regularity conditions this norm of behaviour sustains the efficient outcome in all symmetric games.

• Item Type: MPRA Paper
• Language: English
• Keywords: Kinked Demand, Symmetric Games, Social Norms of Behaviour.
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D2 - Production and Organizations; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D6 - Welfare Economics; D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior

References

Bhaskar, V. (1988), "The Kinked Demand Curve - A Game Theoretic Approach", International Journal of Industrial Organization, 6, pp.373-384.

Bhaskar, V., S. Machin and G. Reid (1991), "Testing a model of the Kinked Demand Curve", The Journal oF Industrial Economics, 39, 3, pp.241-254.

Bicchieri, C. (1990), "Norms of Cooperation", Ethics, 100, pp.838-861.

Domberger, S. (1979), "Price Adjustment and Market Structure", Economic Journal, 89, pp.96-108.

Hall, R.L. and Hitch, C. J.(1939), "Price Theory and Business Behaviour", Oxford Economic Papers, 2, pp.12-45.

Marschak, T. and R., Selten (1978), "Restabilizing Responses, Inertia Supergames and Oligopolistic Equilibria", Quarterly Journal of Economics, 92, pp.71-93.

Maskin, E. and J., Tirole (1988), "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves and Edgeworth Cycles", Econometrica, 56, pp.571-599.

Reid, G., C. (1981), The Kinked Demand Curve Analysis of Oligopoly. Edimburgh, Edimburgh University Press.

Robinson, J. (1933), "Economics of Imperfect Competition", London, Macmillan.

Stigler, G. (1947), "The Kinky Oligopoly Demand Curve and Rigid Prices", Journal of Political Economy, 55, pp. 432-447.

Sweezy, P. M. (1939), "Demand under Conditions of Oligopoly", Journal of Political Economy, 47, pp.568-573.