Cartel Stability and Product Differentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?

P. Posada

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This article analyses how the degree of product differentiation, the size of the cartel and the size of the industry affect the stability of a cartel formed by any number of firms in an industry of any size. The paper considers a supergame-theoretic model to define stability. After a non-loyal member leaves the cartel, two possible reactions by the remaining members of the cartel are assumed. The first one is a trigger strategy where the cartel dissolves after one member has left and the second is one where the cartel keeps acting as a cartel with one member less.

Keywords: CARTELS; SIZE OF INDUSTRY; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: L11 L40 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:556

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