On Cournot and Bertrand competition in collusive mixed oligopolies

Marc Escrihuela-Villar () and Jorge Guillén ()
Additional contact information
Marc Escrihuela-Villar: Edificio Jovellanos
Jorge Guillén: Escuela de Administración de Negocios para Graduados (ESAN)

Journal of Economics, 2025, vol. 144, issue 3, No 2, 246 pages

Abstract: Abstract We consider a mixed oligopoly of one public and N private firms where goods are horizontally differentiated. In our setting, an interdependent payoff structure characterizes the degree of collusion among private firms. We show that, whereas in the Bertrand model, private firms are willing to collude as much as possible, in the Cournot model, the existence of a public firm reduces the scope of collusion. We also prove that the classic discussion comparing price and quantity competition crucially depends on market collusion. More precisely, price competition unambiguously yields larger profits for private firms only if collusion is high enough. In an infinitely repeated game, we prove that collusion is easier to sustain in a larger oligopoly because, in this case, a larger N helps mitigate the effect of the public firm on private firms’ collusion sustainability. Finally, we also find that collusion is always more easily sustained in the Bertrand case than in the Cournot case.

Keywords: Imperfect competition; Mixed oligopoly; Cournot; Bertrand; Trigger strategies (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L41 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00712-024-00889-4 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:144:y:2025:i:3:d:10.1007_s00712-024-00889-4

DOI: 10.1007/s00712-024-00889-4

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().