Cartelizing Groups in Dynamic Linear Oligopoly with Antitrust Threshold

Posted by D. Daniel Sokol

Akio Matsumoto, Chuo University, Ugo Merlone, University of Turin - Department of Statistics and Applied Mathematics, and Ferenc Szidarovszky, University of Arizona - Department of Systems & Industrial Engineering analyze Cartelizing Groups in Dynamic Linear Oligopoly with Antitrust Threshold.

ABSTRACT: The effects of partially cooperating firms are examined in N-firm oligopolies. The Herfindahl-Hirschmann Index is assumed to detect the violation of the antitrust regulation by the firms, and based on this assumption a piece-wise differentiable dynamic system can be developed. The firms stop cooperating if this index becomes larger than a certain threshold and they restart or continue cooperating otherwise. The equilibria of the dynamic system are first determined. Local and global asymptotic stability of the equilibria are then investigated showing the complexity of the dynamic behavior of the system.