Strategic Delegation Improves Cartel Stability

Han, Martijn A.

doi:10.2139/ssrn.1729144

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Strategic Delegation Improves Cartel Stability

Amsterdam Center for Law & Economics Working Paper No. 2010-15

9 Pages Posted: 21 Dec 2010

See all articles by Martijn A. Han

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: 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