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Houba, H.E.D.; Motchenkova, E.I.; Wen, Q. (2010)
Publisher: Tinbergen Instituut (TI)
Languages: English
Types: Research
Subjects: Repeated game, Antitrust enforcement, Cartel, Oligopoly, Repeated game, L4, Antitrust enforcement, Oligopoly, Rechtsdurchsetzung, C7, Oligopol, Kartellrecht, Antitrust enforcement; Cartel; Oligopoly; Repeated game, Cartel, Wiederholte Spiele, Theorie
jel: jel:L4, jel:C7
ddc: ddc:330
This discussion paper has resulted in a publication in Economics Letters, 114, 39-42.

Even under antitrust enforcement, firms may still form a cartel in an infinitely-repeated oligopoly model when the discount factor is sufficiently close to one. We present a linear oligopoly model where the profit-maximizing cartel price converges to the competitive equilibrium price as the discount factor goes to one. We then identify a set of necessary conditions for this seemingly counter-intuitive result.

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