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2002•Munich Personal RePEc Archive (Ludwig Maximilian University of Munich)Requires access

Sequential play and cartel stability in a Cournot oligopoly

Sergio Currarini, Marco A. Marini

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Abstract

We reconsider the problem of cartel stability in a linear\nsymmetric 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 Salant et al. (1983) the only profitable cartel includes all firms in the industry. This result is shown to be robust to non linearities in payffs 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\nsymmetric 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 Salant et al. (1983) the only profitable cartel includes all firms in the industry. This result is shown to be robust to non linearities in payffs provided that the inverse demand function is not too log-concave.

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Available abstract

We reconsider the problem of cartel stability in a linear\nsymmetric 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 Salant et al. (1983) the only profitable cartel includes all firms in the industry. This result is shown to be robust to non linearities in payffs provided that the inverse demand function is not too log-concave.

Key concepts: Cartel, Cournot competition, Oligopoly, Inverse demand function, Collusion, Microeconomics, Economics, Stability (learning theory)

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