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Strategic Delegation Improves Cartel Stability

9 Pages Posted: 21 Dec 2010  

Martijn A. Han

Humboldt University of Berlin

Date Written: December 20, 2010

Abstract

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.

Keywords: Strategic Delegation, Collusion, Cartel Stability

JEL Classification: D43, L13, L20, L41

Suggested Citation

Han, Martijn A., Strategic Delegation Improves Cartel Stability (December 20, 2010). Amsterdam Center for Law & Economics Working Paper No. 2010-15. Available at SSRN: https://ssrn.com/abstract=1729144 or http://dx.doi.org/10.2139/ssrn.1729144

Martijn A. Han (Contact Author)

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, Berlin 10099
Germany

HOME PAGE: http://www.martijnhan.com

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