Collusive price leadership with capacity constraints

Ikuo Ishibashi

International Journal of Industrial Organization, 2008, vol. 26, issue 3, 704-715

Abstract: In this paper, collusive price leadership in homogeneous good capacity-constrained repeated price competition is examined. In the stage game, firms choose their timing of price setting. Although setting a price early is disadvantageous per se, a large firm has an incentive to move early in order to demonstrate its commitment not to deviate. If the discount factor is not too large, this behavior raises the collusive price compared to that arising in collusion with simultaneous moves. As a result, all firms obtain (strictly) higher profits.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:26:y:2008:i:3:p:704-715

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