Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/192918
Authors: 
Wölfing, Nikolas
Year of Publication: 
2019
Series/Report no.: 
ZEW Discussion Papers 19-003
Abstract: 
This paper studies the effect of forward contracts on the stability of collusion among firms, competing in supply functions on the spot market. A forward market can increase the range of discount factors which allow to sustain collusion. On the contrary, collusion is destabilised when a potential deviator sells a significant amount forward. Results do not depend on the type (financial or physical) of contract fulfilment and are robust to different levels of demand uncertainty. As a policy implication, the study finds that liquid and anonymous forward markets are incompatible with collusion.
Subjects: 
forward trading
collusion
supply function equilibrium
JEL: 
C73
D43
L13
G13
Document Type: 
Working Paper
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