Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159196
Authors: 
Lambertini, Luca
Sasaki, Dan
Year of Publication: 
1999
Series/Report no.: 
Quaderni - Working Paper DSE 355
Abstract: 
In an oligopoly supergame, firm`s actions in prices and quantities are subject to non-negativity constraints. These aonstarints can obstruct the practicability of oprimal punishment (a la Abreu (1989), Lambson (1987), and Hacker (1996)) in sustaining tacit collusion. Noting that the prospect of single-period optimal punichment depends indispensably upon firms` ability to charge prices strictly below marginal costs (loss-making pricing), under the presence of positive rice constraints, marginal costs can serve as a "fudge" to materialize single-period optimal punishment. In this pa-per we charactarise the effects of profit-cost ratios (or mark-ups) on the sustainability of tacit col-lusion, in light of optimal punishment.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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