11 Pages Posted: 1 Jan 2011
Date Written: November 23, 2010
This paper analyzes the farsighted behaviour of firms that form a dominant price leadership cartel. We consider stability concepts such as the farsighted core, the farsighted stable sets, and the largest consistent set. We show that: (i) the farsighted core is either an empty set or a singleton set of the grand cartel; (ii) any Pareto efficient cartel is itself a farsighted stable set; and (iii) the set of cartels in which fringe firms enjoy higher profits than the firms in the minimal Pareto efficient cartel is the largest consistent set.
JEL Classification: C71, D43, L13
Suggested Citation: Suggested Citation
Kamijo, Yoshio and Muto, Shigeo, Farsighted Coalitional Stability of a Price Leadership Cartel (November 23, 2010). Japanese Economic Review, Vol. 61, Issue 4, pp. 455-465, 2010. Available at SSRN: https://ssrn.com/abstract=1733369 or http://dx.doi.org/10.1111/j.1468-5876.2009.00499.x
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