Collusive Price Leadership Among Firms with Different Discount Factors-Reference-Cited by-同舟云学术

Collusive Price Leadership Among Firms with Different Discount Factors

Published:2024-04-08 Issue: Volume: Page:
ISSN:1935-1704
Container-title:The B.E. Journal of Theoretical Economics
language:en
Short-container-title:

Author:

Liu Shuaicheng¹

Affiliation:

1. College of Business , 12634 Shanghai University of Finance and Economics , No. 777 Guoding Road , Shanghai , China

Abstract

Abstract This paper analyzes the effect of price leadership on collusion among firms with different discount factors. We first find that price leadership relaxes the incentive constraints for collusion. We then derive a dynamic collusion path in which the firms with lower discount factors initially occupy the largest market share and then gradually cede it to the firms with higher discount factors. This collusion path is shaped by the conflicting forces of fairness and efficiency. Additionally, price leadership can restore the efficiency implied by differentiated time preferences in repeated games.

Publisher

Walter de Gruyter GmbH

Link

https://www.degruyter.com/document/doi/10.1515/bejte-2023-0112/pdf

Reference43 articles.

1. Amir, Rabah, and Isabel Grilo. 1999. “Stackelberg Versus Cournot Equilibrium.” Games and Economic Behavior 26 (1): 1–21. https://doi.org/10.1006/game.1998.0650.

2. Amir, Rabah, and Anna Stepanova. 2006. “Second-Mover Advantage and Price Leadership in Bertrand Duopoly.” Games and Economic Behavior 55 (1): 1–20. https://doi.org/10.1016/j.geb.2005.03.004.

3. Andreoli-Versbach, Patrick, and Jens-Uwe Franck. 2015. “Endogenous Price Commitment, Sticky and Leadership Pricing: Evidence from the Italian Petrol Market.” International Journal of Industrial Organization 40: 32–48. https://doi.org/10.1016/j.ijindorg.2015.02.006.

4. Bernheim, B. Douglas, and Michael D. Whinston. 1990. “Multimarket Contact and Collusive Behavior.” The RAND Journal of Economics 21 (1): 1–26. https://doi.org/10.2307/2555490.

5. Bos, Iwan, Wilko Letterie, and Dries Vermeulen. 2015. “Antitrust as Facilitating Factor for Collusion.” The B.E. Journal of Economic Analysis & Policy 15 (2): 797–814. https://doi.org/10.1515/bejeap-2014-0023.