Sequential play and cartel stability in Cournot oligopoly
Sergio Currarini, Marco A. Marini
Abstract
Sergio Currarini, Marco A. Marini
Abstract
We reconsider the problem of cartel stability in a linear symmetric Cournot oligopoly by assuming that every coalition of firms defecting from a cartel can choose its quantity before the remaining firms. We show that differently from [5] the only profitable cartel includes all firms in the industry. This result is shown to be robust to nonlinearity of the profit function, provided that the inverse demand function is not too log-concave.
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We reconsider the problem of cartel stability in a linear symmetric Cournot oligopoly by assuming that every coalition of firms defecting from a cartel can choose its quantity before the remaining firms. We show that differently from [5] the only profitable cartel includes all firms in the industry. This result is shown to be robust to nonlinearity of the profit function, provided that the inverse demand function is not too log-concave.
Key concepts: Cartel, Cournot competition, Oligopoly, Stability (learning theory), Collusion, Industrial organization, Microeconomics, Business