A Cost-side Analysis on Collusive Sustainability

Lambertini, Luca ; Sasaki, Dan (1999) A Cost-side Analysis on Collusive Sustainability. Bologna: Dipartimento di Scienze economiche DSE, p. 21. DOI 10.6092/unibo/amsacta/4954. In: Quaderni - Working Paper DSE (355). ISSN 2282-6483.
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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.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Sasaki, Dan
Keywords
Marginal cost, mark-up, positive price constraint, positive quality constraint, product differentiation, substitutability
Subjects
ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 09:43
Last modified
05 Apr 2016 09:43
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