Coordinated Conduct: A Review of Preconditions for Profitability and Stability

Richard Stockton Higgins


Mark Perelman

PineBridge Investments

January 22, 2013

We have investigated the likelihood of cartel formation within various oligopoly models relying on various previous works which analyzed cartel profitability as well as cartel stability in the sense of d’Aspremont, Jacquemin, Gabszewicz and Weymark (1983). Specifically, a cartel is considered stable whenever no outsider desires to join and no insider desires to defect even though for a given cartel size, outsiders may earn more than insiders. Our review has addressed the basic structural preconditions for profitable cartel formation when some but not all firms in a market engage in coordinated pricing and production. We think that prior to consideration of the various factors that influence the profitability of establishing and enforcing an agreement, a structural screen is appropriate.

Number of Pages in PDF File: 23

Keywords: Cartels, Collusion, Antitrust

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Date posted: January 24, 2012 ; Last revised: January 23, 2013

Suggested Citation

Higgins, Richard Stockton and Perelman, Mark, Coordinated Conduct: A Review of Preconditions for Profitability and Stability (January 22, 2013). Available at SSRN: http://ssrn.com/abstract=1991151 or http://dx.doi.org/10.2139/ssrn.1991151

Contact Information

Richard Stockton Higgins (Contact Author)
BRG ( email )
470 Atlantic Avenue
4th Floor
Washington, DC 20037
United States
Mark Perelman
PineBridge Investments ( email )
399 Park Avenue, 4th Floor
New York, NY 10022
United States
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