Collusion and Durability

Dan Sasaki and Roland Strausz ()

No 246, Discussion Papers from SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We develop a model to show that cartels that produce goods with lower durability are easier to sustain implicitly. This observation gen- erates the following results: 1) implicit cartels have an incentive to pro- duce 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.

Keywords: cartels; collusion; durability (search for similar items in EconPapers)
JEL-codes: L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: Written

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Related works:
Working Paper: Collusion and Durability (2007)
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