Alternating Monopoly and Tacit Collusion

Andréa Amelio and Sara Biancini
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Andréa Amelio: Directorate General Competition - European Commission [Brussels]

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Abstract: This paper considers the use of the alternating monopoly strategy (AMS) as a (tacit) collusion device. We show that firms may choose this strategy in particular environments, when other collusive strategies are also feasible. In particular, we stress how the presence of an observable move (entry), distinct from the competitive stage (price setting), can serve as a coordination device, reducing monitoring costs in incomplete information environments. The paper thus shows that AMS may be preferable to the classic market sharing strategy (MSS) and in some cases it is the only collusive equilibrium.

Keywords: collusion; alternating monopoly; temporal market sharing; antitrust (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

Published in Journal of Industrial Economics, 2010, 58 (2), pp.402-423. ⟨10.1111/j.1467-6451.2010.00412.x⟩

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Journal Article: ALTERNATING MONOPOLY AND TACIT COLLUSION* (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01103810

DOI: 10.1111/j.1467-6451.2010.00412.x

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