FARSIGHTED COALITIONAL STABILITY OF A PRICE LEADERSHIP CARTEL

Yoshio Kamijo and Shigeo Muto

The Japanese Economic Review, 2010, vol. 61, issue 4, 455-465

Abstract: This paper analyzes the farsighted behaviour of firms that form a dominant price leadership cartel. We consider stability concepts such as the farsighted core, the farsighted stable sets, and the largest consistent set. We show that: (i) the farsighted core is either an empty set or a singleton set of the grand cartel; (ii) any Pareto efficient cartel is itself a farsighted stable set; and (iii) the set of cartels in which fringe firms enjoy higher profits than the firms in the minimal Pareto efficient cartel is the largest consistent set.

Keywords: C71; D43; L13 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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