2023/01/02 by Leonardo Madio, Aldo Pignataro
Business, Management and Accounting · Decision Sciences · Economics, Econometrics and Finance · Mathematics · #Auction Theory and Applications #Business #Cartel #Collusion #Constraint (computer-aided design) #Consumer Market Behavior and Pricing #Cournot competition #Ecology #Economics #Enforcement #Game theory #Incentive #Industrial organization #Mathematics #Merger and Competition Analysis #Microeconomics #Oligopoly #Operations management #Pareto principle #Repeated game #Sustainability
paper · doi:10.1093/oep/gpac054
openalex publication_date 2023/01/02 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Abstract We study an infinitely repeated oligopoly game in which firms compete on quantity and one of them is capacity-constrained. We show that collusion sustainability is non-monotonic in the size of the capacity-constrained firm, which has little incentive to deviate from a cartel. We also present conditions for the emergence of a partial cartel, with the capacity-constrained firm being excluded by the large firms or self-excluded. In the latter case, we show under which circumstances the small firm induces a partial conspiracy that is Pareto-dominant. Implications for cartel identification and enforcement are finally discussed.