The neglected effects of demand characteristics on the sustainability of collusion

Andrea Gallice

Research in Economics, 2010, vol. 64, issue 4, 240-246

Abstract: According to standard IO models, the parameters that characterize market demand (intercept, slope, and elasticity) and technology (the level of symmetric marginal costs) do not play any role in defining the sustainability of collusive behaviors in Bertrand oligopolies. This paper modifies this counterintuitive result by showing that all of the aforementioned factors do indeed matter when prices are assumed to be discrete rather than continuous. The sign of these effects is clear. Their magnitude varies greatly; i.e., in some cases, it is totally negligible, while in others, it becomes extremely relevant.

Keywords: Collusion; Market; demand; Discrete; prices; Bertrand; supergames (search for similar items in EconPapers)
Date: 2010
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Related works:
Working Paper: The Neglected Effects of Demand Characteristics on the Sustainability of Collusion (2008)
Working Paper: The Neglected Effects of Demand Characteristics on the Sustainability of Collusion (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:64:y:2010:i:4:p:240-246

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