Download this Paper Open PDF in Browser

The Kinked Demand Model and the Stability of Cooperation

WP-EMS # 2009/05

12 Pages Posted: 24 Sep 2009  

Marco A. Marini

University of Rome La Sapienza; CREI, University Rome III

Sergio Currarini

University of Leicester - Department of Economics; Ca Foscari University of Venice - Dipartimento di Economia

Date Written: July 1, 2009

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.

Keywords: kinked demand, symmetric games, norms of behaviour

JEL Classification: C70, D21, D43, L13

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: https://ssrn.com/abstract=1157412 or http://dx.doi.org/10.2139/ssrn.1157412

Marco A. Marini (Contact Author)

University of Rome La Sapienza ( email )

Piazzale Aldo Moro, 5
Rome, 00181
Italy
+39 06 49910843 (Phone)

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, Leicestershire LE1 7RH
United Kingdom

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Paper statistics

Downloads
20
Abstract Views
378