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dc.contributor.authorAndersson, Olaen
dc.contributor.authorWengström, Eriken
dc.date.accessioned2012-02-14-
dc.date.accessioned2012-03-28T13:08:19Z-
dc.date.available2012-03-28T13:08:19Z-
dc.date.issued2010-
dc.identifier.urihttp://hdl.handle.net/10419/56275-
dc.description.abstractThis paper extends the concept of weak renegotiation-proof equilibrium (WRP) to allow for costly renegotiation and shows that even small renegotiation costs can have dramatic effects on the set of equilibria. More specifically, the paper analyzes the infinitely repeated Bertrand game. It is shown that for every level of renegotiation cost there exists a discount factor such that any collusive profit can be supported as an equilibrium outcome. Hence, any arbitrary small renegotiation cost will suffice to facilitate collusive outcomes for sufficiently patient firms. This result stands in stark contrast to the unique pure-strategy WRP equilibrium without renegotiation costs, which implies marginal-cost pricing in every period. Moreover, in comparison to the findings of McCutcheon (1997), who states that renegotiation costs have to be substantial to facilitate collusion, this result points to a quite different conclusion.en
dc.language.isoengen
dc.publisher|aStockholm School of Economics, The Economic Research Institute (EFI) |cStockholmen
dc.relation.ispartofseries|aSSE/EFI Working Paper Series in Economics and Finance |x725en
dc.subject.jelC72en
dc.subject.jelD43en
dc.subject.ddc330en
dc.subject.keywordNoncooperative game theoryen
dc.subject.keywordWeak Renegotiation-proofnessen
dc.subject.keywordCostly Renegotationen
dc.subject.keywordRepeated Bertrand gamesen
dc.subject.stwNichtkooperatives Spielen
dc.subject.stwWiederholte Spieleen
dc.subject.stwUnvollkommener Markten
dc.subject.stwVerhandlungstheorieen
dc.titleCostly renegotiation in repeated Bertrand games-
dc.typeWorking Paperen
dc.identifier.ppn623153335en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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