Title: Internal cartel stability with time-dependent detection probabilities
Authors: Hinloopen, Jeroen # ×
Issue Date: Nov-2006
Publisher: Elsevier science bv
Series Title: International journal of industrial organization vol:24 issue:6 pages:1213-1229
Abstract: To account for the illegal nature of price-fixing agreements, per-period detection probabilities that can vary over time are introduced in a dynamic oligopoly. The resulting ICCs for internal cartel stability indicate that for discount factors up to 10% per-period detection probabilities of 5% are needed to reduce the number of cartel members by 50%. For the special case of stationary supergames with constant per-period detection probabilities p elegant rules emerge: internal cartel stability requires the discount factor to increase with 100xp/(1-p) percent while a fixed fine of 100x(1-p)/p percent of incremental cartel profits is required for making the ICC always binding. (c) 2006 Elsevier B.V. All rights reserved.
ISSN: 0167-7187
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Department of Managerial Economics, Strategy and Innovation (MSI), Leuven
× corresponding author
# (joint) last author

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