Citation

Discussion Paper Details

Please find the details for DP6975 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The Neglected Effects of Demand Characteristics on the Sustainability of Collusion

Author(s): Andrea Gallice

Publication Date: September 2008

Keyword(s): Bertrand supergames, collusion and market demand

Programme Area(s): Industrial Organization

Abstract: According to standard IO models, the characteristics of market demand (intercept, slope, elasticity) and of the technology (level of symmetric marginal costs) do not play any role in defining the sustainability of collusive behaviors in Bertrand oligopolies. The paper modifies this counterintuitive result by showing that all the above mentioned factors do affect the sustainability of collusion when prices are assumed to be discrete rather than continuous. The sign of these effects is unambiguous. Their magnitude varies greatly: in some cases it is totally negligible, in others it becomes extremely relevant.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6975

Bibliographic Reference

Gallice, A. 2008. 'The Neglected Effects of Demand Characteristics on the Sustainability of Collusion'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6975