EconPapers    
Economics at your fingertips  
 

How Demand Information Can Destabilize a Cartel

Liliane Giardino-Karlinger ()

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This paper studies a symmetric Bertrand duopoly with imperfect mon- itoring where rms receive noisy public signals about the state of demand. These signals have two opposite e ects on the incentive to collude: avoid- ing punishment after a low-demand period increases collusive pro ts, mak- ing collusion more attractive, but it also softens the threat of punishment, which increases the temptation to undercut the rival. There are cases where the latter e ect dominates, and so the collusive equilibrium does not always exist when it does absent demand information. These ndings are related to the Sugar Institute Case studied by Genesove and Mullin (2001).

JEL-codes: L13 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-ind and nep-mic
Date: 2008-02
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0803.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:0803

Access Statistics for this paper

More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Series data maintained by Paper Administrator ().

 
Page updated 2017-11-17
Handle: RePEc:vie:viennp:0803