Arbeitspapier

Cartel Stability, Mark-Up Cyclicality and Government Spending Multipliers

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Mark-up cyclical behaviour is relevant in determining the size of government spending multiplier on output. While theoretical literature priviliged the counteryclical hypothesis, empirical evidence is far from being conclusive. Based on seminal Rotemberg and Saloner (1986) contribution, we build a theoretical framework based on Bertrand duopoly, stochastic demand and product differentiation, where the analysis of cartel stability under partial collusion points towards procyclical pricing. According to the intensity of marginal cost cyclicality, this can produce a procyclical mark up or - at least- render it less countercyclical than expected, with relevant effects on the transmission mechanism of government spending stimuli.

Language
Englisch

Bibliographic citation
Series: Quaderni - Working Paper DSE ; No. 820

Classification
Wirtschaft
Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Oligopoly and Other Imperfect Markets

Event
Geistige Schöpfung
(who)
Lambertini, Luca
Marattin, Luigi
Event
Veröffentlichung
(who)
Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
(where)
Bologna
(when)
2012

DOI
doi:10.6092/unibo/amsacta/4196
Handle
Last update
10.03.2025, 11:43 AM CET

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Object type

  • Arbeitspapier

Associated

  • Lambertini, Luca
  • Marattin, Luigi
  • Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)

Time of origin

  • 2012

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