Title
Localized competition, multimarket operation, and collusive behavior Localized competition, multimarket operation, and collusive behavior
Author
Publication type
article
Publication
Philadelphia, Pa ,
Subject
Economics
Source (journal)
International economic review. - Philadelphia, Pa
Volume/pages
39(1998) :2 , p. 371-398
ISSN
0020-6598
ISI
000073493600007
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Abstract
This paper studies collusive behavior in a repeated oligopoly with localized competition. Private information about the rivals' past actions naturally arises from this market structure. The resulting communication problems imply that firms should adopt strategies with sufficiently lenient punishments. Infinite grim punishments are too severe for large discount factors. The standard stick-and-carrot punishments from the perfect public information model are too severe for all discount factors. Modified stick-and-carrot punishments can be used, although for a smaller range of discount factors than the standard stick-and-carrot punishments under public information.
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