Abstract

http://ssrn.com/abstract=1157412
 
 

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The Kinked Demand Model and the Stability of Cooperation


Marco A. Marini


Sapienza Università di Roma ; CREI, University Rome III

Sergio Currarini


University of Leicester - Department of Economics; Ca Foscari University of Venice - Department of Economics

July 1, 2009

WP-EMS # 2009/05

Abstract:     
This paper revisits a particular behaviour for firms competing in imperfect competitive markets, underlying the well known model of kinked demand curve. We show that under some symmetry and regularity conditions, this asymmetric behaviour of firms sustains monopoly pricing, and possesses therefore some "rationality" interpretation. We also show that such a behaviour can be generalized and interpreted as a norm of behaviour that sustains efficient outcomes in a more general class of symmetric games.

Number of Pages in PDF File: 12

Keywords: kinked demand, symmetric games, norms of behaviour

JEL Classification: C70, D21, D43, L13

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Date posted: September 24, 2009  

Suggested Citation

Marini, Marco A. and Currarini, Sergio, The Kinked Demand Model and the Stability of Cooperation (July 1, 2009). WP-EMS # 2009/05. Available at SSRN: http://ssrn.com/abstract=1157412 or http://dx.doi.org/10.2139/ssrn.1157412

Contact Information

Marco A. Marini (Contact Author)
Sapienza Università di Roma ( email )
Via Ariosto, 25
Rome, 00181
Italy
+390677274044 (Phone)
+390677274033 (Fax)
HOME PAGE: http://www.dis.uniroma1.it/marini/
CREI, University Rome III ( email )
Via Ostiense, 161
Rome, 00154
Italy
HOME PAGE: http://host.uniroma3.it/centri/crei/
Sergio Currarini
University of Leicester - Department of Economics ( email )
Department of Economics
Leicester LE1 7RH, LE1 7RH
United Kingdom
Ca Foscari University of Venice - Department of Economics ( email )
Cannaregio 873
Venice, 30121
Italy
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