Threats as Credible Deterrents to Cheating in Cartels: A Comparative Analysis in a Static Framework

Robert Rothschild

Australian Economic Papers, 1987, vol. 26, issue 49, 216-24

Abstract: This paper deals with the use of threats as a device for maintaining cartel stabi lity in the context of the static model. The author considers three a pproaches (Osborne, Reaction Function, and Cournot) and shows with th e aid of familiar analysis how they differ from one another in respec t to their credibility and their power to deter cheating behavior. He also considers the circumstances under which none of these threats o ffers a credible deterrent to cheating. Copyright 1987 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Date: 1987
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