Abstract
Stability of collusion in differentiated oligopolies is studied without symmetry restrictions on the available strategies. It is demonstrated that if the number of firms is sufficiently large, two-phase stick-and-carrot punishment schemes apply at the highest possible discount rate with respect to collusion on the joint profit-maximizing output. If stick-and-carrot punishment schemes are used, collusive stability of the joint profit-maximizing output improves monotonically with the degree of product differentiation. The conclusions contrast with those obtained by Wernerfelt [Economics Lett. 29 (1989) 303].
Original language | English |
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Journal | Research in Economics |
Volume | 57 |
Issue number | 1 |
Pages (from-to) | 53–64 |
ISSN | 1090-9443 |
DOIs | |
Publication status | Published - 2003 |
Externally published | Yes |
Keywords
- Collusion
- Product differentiation
- Stick-and-carrot