A Dynamic Oligopoly with Collusion and Price Wars

A Dynamic Oligopoly with Collusion and Price Wars

Author: Chaim Fershtman

Publisher:

Published: 1999

Total Pages: 56

ISBN-13:

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Most of the theoretical work on collusion and price wars assumes identical firms and an unchanging environment, assumptions which are at odds with what we know about most industries. Further that literature focuses on the impact of collusion on prices. Whether an industry can support collusion also effects investment incentives and hence the variety, cost, and quality of the products marketed. We provide a collusive framework with heterogeneity among firms, investment, entry, and exit. It is a symmetric information model in which it is hard to sustain collusion when either one of the firms does not keep up with the advances of its competitors, or a low quality' entrant enters. In either case there will be an active firm that is quite likely to exit after it deviates, but if one of the competitors is near an exit state the other incumbent(s) has an incentive to price predatorily (that is to deviate themselves). We use numerical analysis to compare an institutional structure that allows for collusion to one which does not (perhaps because of an active antitrust authority). Price paths clearly differ in the two environments; in particular only the collusive industry generates price wars. The collusive industry offers both more and higher quality products to consumers, albeit often at a higher price. The positive effect of collusion on the variety and quality of products marketed more than compensates consumers for the negative effect of collusive prices, so that consumer surplus is larger in the collusive environment.


Termination of Price Wars

Termination of Price Wars

Author: Michael Bungert

Publisher: Springer Science & Business Media

Published: 2012-12-06

Total Pages: 258

ISBN-13: 3322816257

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Michael Bungert investigates the possibility to terminate (non-beneficial) price wars through appropriate signals and analyzes the effect of different types of signals on the price reaction behaviour of a competitor. He demonstrates that all signal types show a significant effect on the probability of a co-operative price reaction.


Dynamic Models of Oligopoly

Dynamic Models of Oligopoly

Author: D. Fudenberg

Publisher: Taylor & Francis

Published: 2013-06-17

Total Pages: 104

ISBN-13: 1136456120

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Fudenberg and Tirole use the game-theoretic issues of information, commitment and timing to provide a realistic approach to oligopoly.


Competition Among the Few

Competition Among the Few

Author: William John 1905- Fellner

Publisher: Hassell Street Press

Published: 2021-09-10

Total Pages: 360

ISBN-13: 9781015210752

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This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.


Strategic Competition in Oligopolies with Fluctuating Demand

Strategic Competition in Oligopolies with Fluctuating Demand

Author: Leslie Neubecker

Publisher: Springer Science & Business Media

Published: 2006-02-17

Total Pages: 237

ISBN-13: 3540295577

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Dynamic oligopolistic competition has implications both for the strategic management of firms and for the design of an effective competition policy. Consequently, the present book considers the issue from a private and social perspective. It discusses the potential pro- and anticollusive effects of long-term business strategies, especially for cooperation and reinvestment in production, financing and management compensation, in markets with fluctuating demand. The method of supergame theory is applied to integrate long-run decisions and different types of demand into the analysis. Aside from its contributions to the theoretical literature, the book provides valuable insights into the design of competition policy. The observed development of prices is an indicator of the extent of collusion in the market and can thereby be used to assess antitrust regulation in certain business areas, and to focus the resources of competition authorities on markets where conditions are conducive to collusion.


Competition Policy and Price Fixing

Competition Policy and Price Fixing

Author: Louis Kaplow

Publisher: Princeton University Press

Published: 2013-06-30

Total Pages: 509

ISBN-13: 1400846072

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Throughout the world, the rule against price fixing is competition law's most important and least controversial prohibition. Yet there is far less consensus than meets the eye on what constitutes price fixing, and prevalent understandings conflict with the teachings of oligopoly theory that supposedly underlie modern competition policy. Competition Policy and Price Fixing provides the needed analytical foundation. It offers a fresh, in-depth exploration of competition law's horizontal agreement requirement, presents a systematic analysis of how best to address the problem of coordinated oligopolistic price elevation, and compares the resulting direct approach to the orthodox prohibition. In doing so, Louis Kaplow elaborates the relevant benefits and costs of potential solutions, investigates how coordinated price elevation is best detected in light of the error costs associated with different types of proof, and examines appropriate sanctions. Existing literature devotes remarkably little attention to these key subjects and instead concerns itself with limiting penalties to certain sorts of interfirm communications. Challenging conventional wisdom, Kaplow shows how this circumscribed view is less well grounded in the statutes, principles, and precedents of competition law than is a more direct, functional proscription. More important, by comparison to the communications-based prohibition, he explains how the direct approach targets situations that involve both greater social harm and less risk of chilling desirable behavior--and is also easier to apply.


The Antitrust Paradox

The Antitrust Paradox

Author: Robert Bork

Publisher:

Published: 2021-02-22

Total Pages: 536

ISBN-13: 9781736089712

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The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.


Economics and the Enforcement of European Competition Law

Economics and the Enforcement of European Competition Law

Author: Christopher Decker

Publisher: Edward Elgar Publishing

Published: 2009-01-01

Total Pages: 311

ISBN-13: 1849801967

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The book is well written and readable by non economists. The approaches, questions, methodology, and basis for selection of cases/interviewees are clearly explained and justified. This book is a valuable contribution to the literature. Rhonda Smith, Competition and Consumer Law Journal Recent years have seen a trend toward an economics-based approach to the enforcement of European competition law. But what is meant by economics-based , and how does this approach sit with legal and enforcement practice? This book seeks to place in perspective the growing use of economics in European competition law enforcement by examining precisely how economics contributes to the enforcement activity of the European Commission and Courts. Christopher Decker provides unique empirical insights as to how economic theory, thinking, techniques and data have featured in decision-making in the area of co-ordinated effects. The role of economics is examined throughout the entire enforcement process, from the decision to initiate an investigation to the design and implementation of remedies, and its conclusions are of general relevance to all areas of competition law enforcement where economics is used. Utilising a broad and multifaceted conception of economics, this book is essential reading for academics and students interested in European competition law, EC competition lawyers, applied industrial economists and enforcement officials. It will also be an invaluable tool for academic libraries and institutes, government agencies, law firms and economic consultancies.


New Developments in the Analysis of Market Structure

New Developments in the Analysis of Market Structure

Author: International Economic Association

Publisher: MIT Press

Published: 1986

Total Pages: 588

ISBN-13: 9780262690935

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These contributions discuss a number of important developments over the past decade in a newly established and important field of economics that have led to notable changes in views on governmental competition policies. They focus on the nature and role of competition and other determinants of market structures, such as numbers of firms and barriers to entry; other factors which determine the effective degree of competition in the market; the influence of major firms (especially when these pursue objectives other than profit maximization); and decentralization and coordination under control relationships other than markets and hierarchies.ContributorsJoseph E. Stiglitz, G. C. Archibald, B. C. Eaton, R. G. Lipsey, David Enaoua, Paul Geroski, Alexis Jacquemin, Richard J. Gilbert, Reinhard Selten, Oliver E. Williamson, Jerry R. Green, G. Frank Mathewson, R. A. Winter, C. d'Aspremont, J. Jaskold Gabszewicz, Steven Salop, Branko Horvat, Z. Roman, W. J. Baumol, J. C. Panzar, R. D. Willig, Richard Schmalensee, Richard Nelson, Michael Scence, and Partha Dasgupta