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Competitiveness and Stability of Collusive Behavior

10 Pages Posted: 11 Dec 2012  

Toshihiro Matsumura

University of Tokyo - Institute of Social Science

Noriaki Matsushima

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: December 2012

Abstract

We investigate the relationship between the degree of competition and the stability of collusive behaviour, by introducing the element of relative performance in the objective functions of the firms. We show that an increase in the degree of competition destabilizes the collusion. This relation differs starkly in the standard symmetric Cournot and Bertrand duopoly models, with the former being more unstable than the latter.

Keywords: competitiveness, relative profit, stability of collusion, tacit collusion

JEL Classification: L13, L41

Suggested Citation

Matsumura, Toshihiro and Matsushima, Noriaki, Competitiveness and Stability of Collusive Behavior (December 2012). Bulletin of Economic Research, Vol. 64, pp. s22-s31, 2012. Available at SSRN: https://ssrn.com/abstract=2187719 or http://dx.doi.org/10.1111/j.1467-8586.2012.00439.x

Toshihiro Matsumura (Contact Author)

University of Tokyo - Institute of Social Science ( email )

Hongo 7-3-1
Tokyo, TOKYO 113-0033
Japan

Noriaki Matsushima

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

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