Abstract

https://ssrn.com/abstract=1991151
 
 

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Coordinated Conduct: A Review of Preconditions for Profitability and Stability


Richard Stockton Higgins


BRG

Mark Perelman


PineBridge Investments

January 22, 2013


Abstract:     
We have investigated the likelihood of cartel formation within various oligopoly models relying on various previous works which analyzed cartel profitability as well as cartel stability in the sense of dā€™Aspremont, Jacquemin, Gabszewicz and Weymark (1983). Specifically, a cartel is considered stable whenever no outsider desires to join and no insider desires to defect even though for a given cartel size, outsiders may earn more than insiders. Our review has addressed the basic structural preconditions for profitable cartel formation when some but not all firms in a market engage in coordinated pricing and production. We think that prior to consideration of the various factors that influence the profitability of establishing and enforcing an agreement, a structural screen is appropriate.

Number of Pages in PDF File: 23

Keywords: Cartels, Collusion, Antitrust


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Date posted: January 24, 2012 ; Last revised: January 23, 2013

Suggested Citation

Higgins, Richard Stockton and Perelman, Mark, Coordinated Conduct: A Review of Preconditions for Profitability and Stability (January 22, 2013). Available at SSRN: https://ssrn.com/abstract=1991151 or http://dx.doi.org/10.2139/ssrn.1991151

Contact Information

Richard Stockton Higgins (Contact Author)
BRG ( email )
1800 M Street NW
Second floor
Washington, DC 20036
United States
2024802743 (Phone)
Mark Perelman
PineBridge Investments ( email )
399 Park Avenue, 4th Floor
New York, NY 10022
United States
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References:  12