Partial collusion in an asymmetric duopoly
Marc Escrihuela-Villar (marc.escrihuela@uib.es)
No 47, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada
Abstract:
In this paper we investigate the connection between cost asymmetries and the sustainability of collusion within the context of a infinitely repeated Cournot duopoly. We assume that firms are able to coordinate on distinct output levels than the unrestricted joint profit maximization outcome. We show that, in our model, regardless of the degree of cost asymmetry, at least some collusion is always sustainable if firms are patient enough. We also endogenize the degree of collusion and show that it has an upper bound determined by the most inefficient firm.
Keywords: Collusion; Sustainability; Asymmetry (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L41 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:ubi:deawps:47
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