Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259934 
Authors: 
Year of Publication: 
2006
Series/Report no.: 
Working Paper No. 2006:21
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
In this paper we investigate collusion in an infinitely repeated Bertrand duopoly where firms have different discount factors. In order to study how a collusive agreement is reached we model the equilibrium selection as an alternating-offer bargaining game. The selected equilibrium has several appealing features: First, it is efficient in the sense that it entails immediate agreement on the monopoly price. Second, the equilibrium shows how discount factors affect equilibrium market shares. A comparative statics analysis on equilibrium market shares reveals that changes in discount factors may have ambiguous effects on market shares.
Subjects: 
Bargaining
different discount factors
explicit collusion
market shares
JEL: 
C72
D43
L11
L41
Document Type: 
Working Paper

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