Collusion Among Firms with Short-Lived Members

15 Pages Posted: 2 Mar 2004

See all articles by Munetomo Ando

Munetomo Ando

ARISH, Nihon University

Hajime Kobayashi

Kansai University - Faculty of Economics

Date Written: February 15, 2004

Abstract

This paper studies a class of repeated games played between two identical firms. Each firm consists of overlapping generations of short-lived members. The stage game is either price or quantity competition in a homogeneous good market. We consider whether short-lived members' strategies exist that implement the firm's grim-trigger strategy. We show that if each firm consists of more than two generations, the strategy is implementable with a type of seniority system under both price and quantity competition; if the firm consists of only two generations, the strategy under price competition is implementable, while that under quantity competition is not.

Keywords: Repeated games played by firms, grim-trigger strategy, overlapping generations of members, communication

JEL Classification: C72, C73, D82, J31

Suggested Citation

Ando, Munetomo and Kobayashi, Hajime, Collusion Among Firms with Short-Lived Members (February 15, 2004). Available at SSRN: https://ssrn.com/abstract=511603 or http://dx.doi.org/10.2139/ssrn.511603

Munetomo Ando (Contact Author)

ARISH, Nihon University ( email )

12-5, Goban-cho, Chiyoda-ku
Tokyo, 102-8251
Japan

Hajime Kobayashi

Kansai University - Faculty of Economics ( email )

3-3-35 Yamatecho
Suita, Osaka, 564-8680
Japan

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