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Tacit collusion and market concentration under network effects

Rupayan Pal () and Marcella Scrimitore ()

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: In an infnitely repeated Cournot game with trigger strategy punishment, we demonstrate that the relationship between market concentration and collusion sustainability depends on the strength of network externalities. The latter is shown to interact with the number of firms and to affect the profitability of cooperation vs. competition, which delivers the result, challenging conventional wisdom, that lower market concentration can make collusion more stable.

Keywords: Collusion; market concentration; network ekects (search for similar items in EconPapers)
JEL-codes: L13 L14 L41 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2016-04
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind and nep-net
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