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Cartelising Groups in Dynamic Hyperbolic Oligopoly with Antitrust Threshold

12 Pages Posted: 1 Jan 2011  

Akio Matsumoto

Chuo University

Ugo Merlone

University of Turin - Department of Psychology

Ferenc Szidarovszky

University of Arizona - Department of Systems & Industrial Engineering (SIE)

Abstract

Empirical evidence, and theoretical results have shown that, in an industry, higher concentration index indicates higher price-cost margin. In order to detect collusive behaviour the antitrust authorities often monitor the Herfindahl-Hirschman Index. We consider N-firm oligopolies where a group of firms partially cooperate with each other, and monitor the Herfindahl-Hirschman Index as well. After suspecting that the authorities might notice the violation of antitrust regulations, they stop their cooperation. The group will not cooperate again until the Index moves back to the legal domain. This flip-flop dynamical model is formulated, the equilibria are determined, and the asymptotic properties of the system are examined.

Suggested Citation

Matsumoto, Akio and Merlone, Ugo and Szidarovszky, Ferenc, Cartelising Groups in Dynamic Hyperbolic Oligopoly with Antitrust Threshold. Australian Economic Papers, Vol. 49, No. 4, pp. 289-300, 2010. Available at SSRN: https://ssrn.com/abstract=1732928 or http://dx.doi.org/10.1111/j.1467-8454.2010.00403.x

Akio Matsumoto (Contact Author)

Chuo University ( email )

2nd floor Blg 4 Tampa Campus
742-1 Higashinakano, Hachioji
Tokyo 192-03
Japan

Ugo Merlone

University of Turin - Department of Psychology ( email )

Via Verdi 10
Torino, I 10124
Italy

Ferenc Szidarovszky

University of Arizona - Department of Systems & Industrial Engineering (SIE) ( email )

Tucson, AZ
United States
520-621-6557 (Phone)

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