Collusion in Dynamic Oligopolies in the Presence of Entry Threats

L Rune Stenbacka

Journal of Industrial Economics, 1990, vol. 39, issue 2, 147-54

Abstract: This paper considers a generalized oligopoly supergame, where an endogenous entry decision is included. The author proves that strategies based on most severe symmetric punishments can sustain some degree of collusion even with arbitrarily small entry barriers provided that the discount rate is sufficiently small. The model provides a justification for a view suggesting that neither substantial barriers to entry nor strategic or informational asymmetries are necessary for an oligopoly with some degree of cooperation to prevail. Copyright 1990 by Blackwell Publishing Ltd.

Date: 1990
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