The collusion incentive constraint

Jesper Fredborg Huric Larsen

MPRA Paper from University Library of Munich, Germany

Abstract: The collusion incentive constraint is an important economic measure of cartel stability. It weighs the profits of being in a cartel with those of cheating and punishment of the remaining cartel members. The constraint places no restrictions on firm cartel, cheating and punishment pricing, but is usually considered in a restricted competitive set up characterized by either Cournot or Bertrand competition. This paper examines the constraint under Bertrand competition and homogenous goods when assuming that cartel members have the same market power and then continues to examine if this is not so.

Keywords: Collusion; firm incentives; market power (search for similar items in EconPapers)
JEL-codes: C71 L2 L4 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58449

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