Competitiveness and Stability of Collusive Behavior
University of Tokyo - Institute of Social Science
Osaka University - Institute of Social and Economic Research
Bulletin of Economic Research, Vol. 64, pp. s22-s31, 2012
We investigate the relationship between the degree of competition and the stability of collusive behaviour, by introducing the element of relative performance in the objective functions of the firms. We show that an increase in the degree of competition destabilizes the collusion. This relation differs starkly in the standard symmetric Cournot and Bertrand duopoly models, with the former being more unstable than the latter.
Number of Pages in PDF File: 10
Keywords: competitiveness, relative profit, stability of collusion, tacit collusion
JEL Classification: L13, L41
Date posted: December 11, 2012
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