Arbeitspapier
Collusion Sustainability with a Capacity Constrained Firm
We study an infinitely repeated oligopoly game in which firms compete on quantity and one of them is capacity constrained. We show that collusion sustainability is non-monotonic in the size of the capacity constrained firm, which has little incentive to deviate from a cartel. We also present conditions for the emergence of a partial cartel, with the capacity constrained firm being excluded by the large firms or self-excluded. In the latter case, we show under which circumstances the small firm induces a partial conspiracy that is Pareto-dominant. Implications for cartel identification and enforcement are finally discussed.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 10170
- Classification
-
Wirtschaft
Firm Behavior: Theory
Oligopoly and Other Imperfect Markets
Monopolization; Horizontal Anticompetitive Practices
- Subject
-
antitrust
capacity constraints
collusion
partial cartel
- Event
-
Geistige Schöpfung
- (who)
-
Madio, Leonardo
Pignataro, Aldo
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2022
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Madio, Leonardo
- Pignataro, Aldo
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2022
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