Arbeitspapier

Collusion Over the Business Cycle

We present a theory of collusive pricing in markets subject to business cycle fluctuations. In the business cycle model that we adopt, market demand alternates stochastically between fast-growth (boom) and slow-growth (recession) phases. We provide a complete characterization of the most-collusive prices and show that: (1). the most-collusive prices may be procyclical (countercyclical) when demand growth rates are postively (negatively) correlated through time, and (2). the amplitude of the collusive pricing cycle is larger when the expected duration of boom phases decreases and when the expected duration of recession phases increases. We also offer a generalization of Rotemberg and Saloner's (1986) model, and interpret their findings in terms of transitory demand shocks that occur within broader business cycle phases.

Sprache
Englisch

Erschienen in
Series: Discussion Paper ; No. 1118

Klassifikation
Wirtschaft

Ereignis
Geistige Schöpfung
(wer)
Bagwell, Kyle
Staiger, Robert W.
Ereignis
Veröffentlichung
(wer)
Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science
(wo)
Evanston, IL
(wann)
1995

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Bagwell, Kyle
  • Staiger, Robert W.
  • Northwestern University, Kellogg School of Management, Center for Mathematical Studies in Economics and Management Science

Entstanden

  • 1995

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