Collusion and Durability

Dan Sasaki () and Roland Strausz
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Dan Sasaki: University of Tokyo, Institute of Social Science

Departmental Working Papers

Abstract: We make the observation that cartels which produce goods with lower durability are easier to sustain implicitly. This observation generates the following results: 1) implicit cartels have an incentive to produce goods with an inefficiently low level of durability; 2) a monopoly or explicit cartel is welfare superior to an implicit cartel; 3) welfare is non--monotonic in the number of firms; 4) a regulator may demand inefficiently high levels of durability to prevent collusion.

Date: 2007-06-01
New Economics Papers: this item is included in nep-com, nep-ind, nep-knm and nep-mic
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Working Paper: Collusion and Durability (2008)
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