Strategic Delegation Improves Cartel Stability
Martijn A. Han
Humboldt University of Berlin
December 20, 2010
Amsterdam Center for Law & Economics Working Paper No. 2010-15
Fershtman and Judd (1987) and Sklivas (1987) show how strategic delegation in the one-shot Cournot game reduces firm profits. However, with infinitely repeated interaction, strategic delegation allows for an improvement in cartel stability compared to the infinitely repeated standard Cournot game, thereby actually increasing profits.
Number of Pages in PDF File: 9
Keywords: Strategic Delegation, Collusion, Cartel Stability
JEL Classification: D43, L13, L20, L41
Date posted: December 21, 2010
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