On the Tacit Collusion Equilibria of an Investment Timing Game

Richard Ruble and Bruno Versaevel ()
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Bruno Versaevel: EMLYON Business School, Ecully, F-69134, France; and GATE, CNRS, Ecully, F-69130

No 834, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: This note further characterizes the tacit collusion equilibria in the investment timing game of Boyer, Lasserre and Moreaux [1]. Tacit collusion equilibria may or may not exist, and when they do may involve either finite time investments (type 1) or infinite delay (type 2). The relationship between equilibria and common demand forms is not immediately apparent. We provide the full necessary and sufficient conditions for existence. A simple condition on demand primitives is derived that determines the type of equilibria. Common demand forms are then shown to illustrate both finite-time and infinite-delay tacit collusion.

Keywords: Real options; Duopoly; Collusion; Investment (search for similar items in EconPapers)
JEL-codes: C73 D43 D92 L13 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0834

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