CARTELIZING GROUPS IN DYNAMIC LINEAR OLIGOPOLY WITH ANTITRUST THRESHOLD

Akio Matsumoto (), Ugo Merlone and Ferenc Szidarovszky ()
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Akio Matsumoto: Department of Economics, Chuo University, 742-1, Higashi-Nakano, Hachioji, Tokyo, 192-0393, Japan
Ferenc Szidarovszky: Systems and Industrial Engineering Department, University of Arizona, Tucson, AZ 85721-0020, USA

International Game Theory Review (IGTR), 2008, vol. 10, issue 04, 399-419

Abstract: The effects of partially cooperating firms are examined in N-firm oligopolies. The Herfindahl-Hirschmann Index is assumed to detect the violation of the antitrust regulation by the firms, and based on this assumption a piece-wise differentiable dynamic system can be developed. The firms stop cooperating if this index becomes larger than a certain threshold and they restart or continue cooperating otherwise. The equilibria of the dynamic system are first determined. Local and global asymptotic stability of the equilibria are then investigated showing the complexity of the dynamic behavior of the system.

Keywords: Oligopolies; partial cooperation; shareholding interlocks; antitrust regulation; C71 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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DOI: 10.1142/S0219198908002011

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