Sustaining Collusion in Growing Markets

Helder Vasconcelos ()

No 6865, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The impact of demand growth on the collusion possibilities is investigated in a Cournot supergame where market growth may trigger future entry and the collusive agreement is enforced by the most profitable 'grim trigger strategies' available. It is shown that even in situations where perfect collusion can be sustained after entry, coping with a potential entrant in a market which is growing over time may completely undermine any pre-entry collusive plans of the incumbent firms. This is because, before entry, a deviation and the following punishment phase may become more attractive thanks to their additional effect in terms of delaying entry.

Keywords: Collusion; Demand Growth; Entry (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com and nep-reg
Date: 2008-06
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/pubs/dps/DP6865.asp (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Sustaining Collusion in Growing Markets (2008)
Working Paper: Sustaining Collusion in Growing Markets (2008)
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:cpr:ceprdp:6865

Ordering information: This working paper can be ordered from
http://www.cepr.org/pubs/dps/DP6865.asp

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Series data maintained by ().