Inefficiency in Repeated Cournot Oligopoly Games
No 05.12, IEPR Working Papers from Institute of Economic Policy Research (IEPR)
A widely accepted view says that Folk Theorem holds in the repeated Cournot oligopoly games with imperfect price signals satisfying generic conditions. We show that this view is not justi- fied. We argue that maintaining asymptotic joint monopoly outcome is not possible with noisy price signals. When firms have the choice of increasing outputs at equilibrium as a deviation strategy, it is not possible to maintain such collusive outcome, even if the discount rate is close to 1.
Keywords: Oligopoly; ineffciency; repeated games; imperfect price signal; Folk Theorem (search for similar items in EconPapers)
JEL-codes: D23 D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:scp:wpaper:05-12
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