Cartels with Homogeneous and Differentiated Products and Imperfect Monitoring

Piero Tedeschi ()

International Economic Review, 1994, vol. 35, issue 3, 635-56

Abstract: In this paper, two simple oligopoly models are considered: the first with homogeneous and the second with differentiated products. Differently from previous contributions, this paper shows that, with imperfect monitoring, there exists a sequence of symmetric strategy profiles (with stochastic punishment) that are Bayesian perfect equilibria and whose expected present value approaches the optimal cartel one, with the desired level of approximation, as the discount factor converges to one. The strategy is similar to that proposed in 1984 by E. J. Green and R. H. Porter but has a smooth structure and, in general, it allows for higher profits. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1994
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