Collusion and Predation Under Cournot Competition *

Emilie Dargaud (), Petros Sekeris and Maxime Menuet
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Emilie Dargaud: GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper studies how predation strategies can affect the sustainability of collusion in a duopoly. Collusion may be sustained at equilibrium for intermediate discount factors. In such instances predation implies that punishment strategies will yield low subgame perfect payoffs, thereby making collusion easier to sustain. For low discount factors collusion is not sustainable because of the high incentives to deviate to Cournot-Nash strategies. Moreover, for high discount factors it is always optimal to predate a colluding firm, thus contrasting with much of the earlier literature showing that collusion is only achievable by sufficiently patient firms.

Keywords: Collusion Predation Cournot competition. JEL: D43 L13 L41; Collusion; Predation; Cournot competition. JEL: D43; L13; L41 (search for similar items in EconPapers)
Date: 2023-07
Note: View the original document on HAL open archive server: https://hal.science/hal-04206720v1
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Published in Managerial and Decision Economics, inPress

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Related works:
Journal Article: Collusion and predation under Cournot competition (2024)
Working Paper: Collusion and Predation Under Cournot Competition (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04206720

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