(Un)stable vertical collusive agreements

Jean Gabszewicz and Skerdilajda Zanaj

Canadian Journal of Economics/Revue canadienne d'économique, 2015, vol. 48, issue 3, 924-939

Abstract: In this paper, we extend the concept of stability to vertical collusive agreements involving downstream and upstream firms, using a setup of successive Cournot oligopolies. We show that a stable vertical agreement, the unanimous vertical agreement involving all downstream and upstream firms, always exists. Thus, stable vertical collusive agreements exist even for market structures in which horizontal cartels would be unstable. We also show that there are economies for which the unanimous agreement is not the only stable one. Furthermore, the Stigler statement according to which the only ones who benefit from a collusive agreement are the outsiders need not be valid in vertical agreements. Accords collusifs verticaux stables et instables. Ce texte utilise une approche en termes d’oligopoles à la Cournot successifs pour développer le concept de stabilité et l’appliquer aux accords collusifs verticaux impliquant des firmes en amont et en aval. On montre qu’un accord vertical stable existe toujours : l’accord vertical unanime impliquant toutes les firmes en amont et en aval. Des accords collusifs verticaux existent même pour des structures de marché dans lesquels les cartels horizontaux seraient instables. On montre aussi qu’il existe des économies pour lesquelles l’accord unanime n’est pas la seule solution stable. De plus, l’assertion de Stigler à savoir que les seuls qui bénéficient d’un accord collusif sont les acteurs de l’extérieur de ces accords n’est pas nécessairement valide pour les accords verticaux.

Date: 2015
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https://doi.org/10.1111/caje.12163

Related works:
Journal Article: (Un)stable vertical collusive agreements (2015)
Working Paper: (Un)stable vertical collusive agreements (2013)
Working Paper: (Un)stable vertical collusive agreements (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:48:y:2015:i:3:p:924-939

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