Imperfect collusion in an asymmetric duopoly

  • Marc Escrihuela-Villar
  • Carlos Gutiérrez-Hita

Abstract

Using the coefficient of cooperation, we analyse the effect of cost asymmetries on
collusive agreements when firms are able to coordinate on distinct output levels
than the unrestricted joint profit maximization outcome. In this context, we first
investigate the extent to which collusive agreements are feasible. Secondly, we
focus on collusion sustainability in an infinitely repeated game. We show that,
regardless of the degree of cost asymmetry, at least some collusion is always
sustainable. Finally, the degree of collusion is also endogeneised to show that
cooperation has an upper bound determined by the most inefficient firm.
Keywords Imperfect collusion, cost asymmetries, sustainability
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How to Cite
Escrihuela-Villar, M., & Gutiérrez-Hita, C. (2018). Imperfect collusion in an asymmetric duopoly. Estudios de Economía, 45(1), 29-50. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/49264/51756
Section
Articles
Published
2018-05-11