Tacit collusion under fairness and reciprocity

Artikel

This paper departs from the standard profit-maximizing model of firm behavior by assuming that firms are motivated in part by personal animosity-or respect-towards their competitors. A reciprocal firm responds to unkind behavior of rivals with unkind actions (negative reciprocity), while at the same time, it responds to kind behavior of rivals with kind actions (positive reciprocity). We find that collusion is easier to sustain when firms have a concern for reciprocity towards competing firms provided that they consider collusive prices to be kind and punishment prices to be unkind. Thus, reciprocity concerns among firms can have adverse welfare consequences for consumers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Games ; ISSN: 2073-4336 ; Volume: 4 ; Year: 2013 ; Issue: 1 ; Pages: 50-65 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Oligopoly and Other Imperfect Markets ; Business Objectives of the Firm
• Subject: fairness ; reciprocity ; collusion ; repeated games

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): çIriðs, Doruk ; Santos-Pinto, Luís
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2013

Further information

• DOI: doi:10.3390/g4010050
• Handle: http://hdl.handle.net/10419/98501
• Last update: 10.03.2025, 11:43 AM CET