On endogenous cartel size under tacit collusion

Marc Escrihuela-Villar

Investigaciones Economicas, 2008, vol. 32, issue 3, pages 325-338

Abstract: We analyze how the size of a cartel affects the possibility to sustain a collusive agreement. We develop a multi-period oligopoly model with homogeneous, quantity-setting firms, a subset of which are assumed to collude, while the remaining (fringe) firms choose their output levels noncooperatively. We show that, in our model, collusion is easier to sustain the larger the cartel is. The implications of this result on the incentives of firms to participate in a cartel are analyzed. We obtain that a firm is only willing to collude when otherwise collusion cannot be sustained.

Keywords: Collusion; partial cartels; trigger strategies; optimal punishment. (search for similar items in EconPapers)
JEL-codes: L11 L13 L41 D43 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/sep2008/v32i3a3.pdf Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:iec:inveco:v:32:y:2008:i:3:p:325-338

Ordering information: This journal article can be ordered from
http://www.fundacion ... tas/presentacion.asp

Access Statistics for this article

Investigaciones Economicas is edited by Antonio Cabrales and Pedro Mira

More articles in Investigaciones Economicas from Fundación SEPI
Address: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
Series data maintained by Isabel Sánchez-Seco ().