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http://hdl.handle.net/10419/49874
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| Title: | | Endogenous Cartel Formation with Heterogeneous Firms  |
| Authors: | | Bos, Iwan Harrington, Joseph E. |
| Issue Date: | | 2008 |
| Series/Report no.: | | Working papers // the Johns Hopkins University, Department of Economics 544 |
| Abstract: | | In the context of an infinitely repeated capacity-constrained price game, we endogenize the composition of a cartel when .rms are heterogeneous in their capacities. When .rms are sufficiently patient, there exists a stable cartel involving the largest .rms. A .rm with sufficiently small capacity is not a member of any stable cartel. When a cartel is not all-inclusive, colluding firms set a price that serves as an umbrella with non-cartel members pricing below it and producing at capacity. Contrary to previous work, our results suggest that the most severe coordinated e¡èects may come from mergers involving moderate-sized firms, rather than the largest or smallest firms. |
| Subjects: | | Collusion Cartel Size |
| JEL: | | L1 L4 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Papers, Department of Economics, The Johns Hopkins University
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