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Strategic profit sharing between firms

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  • José Luis Ferreira
  • Roberts Waddle

Abstract

We introduce the possibility of unilaterally giving profits away to the rival in different oligopolistic contexts. We find that this strategy may be profitable in some circumstances, thus providing a context for partial tacit collusion in one‐shot oligopolistic interactions. Although the strategy in itself may look unrealistic, we argue that it may be hidden behind a more complicated relation of the firms.

Suggested Citation

  • José Luis Ferreira & Roberts Waddle, 2010. "Strategic profit sharing between firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(4), pages 341-354, December.
    • Handle: RePEc:bla:ijethy:v:6:y:2010:i:4:p:341-354
    DOI: 10.1111/j.1742-7363.2010.00143.x
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    References listed on IDEAS

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    Cited by:

    1. Do, Jihwan, 2022. "Cheating and compensation in price-fixing cartels," Journal of Economic Theory, Elsevier, vol. 200(C).

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