Delegation and Firms’ Ability to Collude: A Comment

7 Pages Posted: 18 Jan 2011

Date Written: December 22, 2010

Abstract

Lambertini and Trombetta (2002) extend Vickers’ (1985) Cournot model of strategic delegation to an infinitely repeated setting and conclude that delegation does not affect cartel stability if managers collude. This result rests on the assumption that managers are rational, but owners are not. This note shows that if owners behave fully rational, then delegation improves cartel stability if managers collude.

Keywords: delegation, cartel stability

JEL Classification: D43, L13, L21

Suggested Citation

Han, Martijn A., Delegation and Firms’ Ability to Collude: A Comment (December 22, 2010). Amsterdam Center for Law & Economics Working Paper No. 2011-02, Available at SSRN: https://ssrn.com/abstract=1742738 or http://dx.doi.org/10.2139/ssrn.1742738

Martijn A. Han (Contact Author)

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

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

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