Infinite horizon oligopoly with asynchronous moves: Cournot-Bertrand reversal

Dan Sasaki

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 3, 327-341

Abstract: In an infinite-horizon oligopoly game, if moves are not synchronised across firms, sustainability of tacitly collusive equilibria becomes substantially distinct from that in a classical simultaneous-move supergame. In linear duopoly, the critical discount factor becomes higher in Bertrand than in Cournot, yet for a low discount factor with which collusion is unsustainable the equilibrium discounted streams of non-collusive profits are higher in a Bertrand game than in a Cournot game. These features are contrary to the well-known observation in synchronous-move supergames, reflecting the tendency that once a deviation path is initiated, then an asynchronous-move Cournot game converges to a competitive outcome more quickly than an asynchronous-move Bertrand game.

Date: 2016
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DOI: 10.1080/16081625.2016.1188753

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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