On Globally Optimal Punishments in the Repeated Cournot Game

Delbono, Flavio ; Lambertini, Luca (2016) On Globally Optimal Punishments in the Repeated Cournot Game. Bologna: Dipartimento di Scienze economiche DSE, p. 19. DOI 10.6092/unibo/amsacta/5483. In: Quaderni - Working Paper DSE (1091). ISSN 2282-6483.
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Abstract

We challenge the global optimality of one-shot punishments in infinitely repeated games with discounting. Specifically, we show that the stick-and-carrot punishment à la Abreu (1986) may not be globally optimal. We prove our result by investigating tacit collusion in the infinite repetition of a linear Cournot game. We illustrate the existence of the stick-and-carrot globally optimal punishment for large cartels, and fully characterise it. Then, we show that for mall cartels, global optimality may be reached only with two-period punishments.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Delbono, FlavioUniversità di Bologna0000-0001-9030-4048
Lambertini, LucaUniversità di Bologna0000-0001-6353-4753
Keywords
cartel stability, implicit collusion, repeated games
Subjects
ISSN
2282-6483
DOI
Deposit date
21 Dec 2016 12:32
Last modified
08 May 2017 14:40
URI

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