10 Pages Posted: 11 Dec 2012
Date Written: December 2012
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: 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
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $38.00 .
File name: j-8586.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.