Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Monday, August 13, 2012

Tacit collusion in a non-repeated price competition game with a soft capacity constraint

Posted by D. Daniel Sokol

Marie-Laure Cabon-Dhersin (CREAM - Universite de Rouen) and Nicolas Drouhin (CES - CNRS Universite Paris I - Pantheon Sorbonne) have posted Tacit collusion in a non-repeated price competition game with a soft capacity constraint.

ABSTRACT: This paper analyses price competition in the case of two firms operating under constant returns to scale with more than one production factor. Factors are chosen sequentially in a two-stage game generating a soft capacity constraint and implying a convex short term cost function in the second stage of the game. We show that tacit collusion is the only predictable result of the whole game i.e. the unique payoff-dominant pure strategy Nash equilibrium. Technically, this paper bridges the capacity constraint literature on price competition and that of the convex cost function.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/08/tacit-collusion-in-a-non-repeated-price-competition-game-with-a-soft-capacity-constraint-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0167684e1798970b

Listed below are links to weblogs that reference Tacit collusion in a non-repeated price competition game with a soft capacity constraint :

Comments

Post a comment