On Interdependent Supergames: Multimarket Contact, Concavity, and Collusion

Giancarlo Spagnolo

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper addresses the effects of multimarket contact on firms’ ability to collude. Real world imperfections tend to makes firms’ objective function strictly concave and market supergames ‘interdependent’: firms’ payoffs in each market depend on how they are doing in others. Then, multimarket contact always facilitates collusion. It may even make it sustainable in all markets when otherwise it would not be sustainable in any. The effects of conglomeration are discussed. ‘Multi-game contact’ is shown to facilitate cooperation in non-oligopolistic supergames as long as agents’ objectives function is submodular in material payoffs.

Keywords: Repeated games; Oligopoly; Collusion; Cooperation; Conglomeration; Mergers (search for similar items in EconPapers)
JEL-codes: C72 D43 L13 L21 (search for similar items in EconPapers)
Date: 1999-03
New Economics Papers: this item is included in nep-gth, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (74)

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Related works:
Journal Article: On Interdependent Supergames: Multimarket Contact, Concavity, and Collusion (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:9914

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