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Collusion in Dynamic Oligopolies in the Presence of Entry Threats

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  • Stenbacka, L Rune

Abstract

This paper considers a generalized oligopoly supergame, where an endogenous entry decision is included. The author proves that strategies based on most severe symmetric punishments can sustain some degree of collusion even with arbitrarily small entry barriers provided that the discount rate is sufficiently small. The model provides a justification for a view suggesting that neither substantial barriers to entry nor strategic or informational asymmetries are necessary for an oligopoly with some degree of cooperation to prevail. Copyright 1990 by Blackwell Publishing Ltd.

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  • Stenbacka, L Rune, 1990. "Collusion in Dynamic Oligopolies in the Presence of Entry Threats," Journal of Industrial Economics, Wiley Blackwell, vol. 39(2), pages 147-154, December.
    • Handle: RePEc:bla:jindec:v:39:y:1990:i:2:p:147-54
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    Cited by:

    1. João Correia-da-Silva & Joana Pinho & Hélder Vasconcelos, 2016. "Sustaining collusion in markets with entry driven by balanced growth," Journal of Economics, Springer, vol. 118(1), pages 1-34, May.
    2. Sorgard, Lars, 1997. "Judo economics reconsidered: Capacity limitation, entry and collusion," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 349-368, May.
    3. Kai-Uwe Kühn, 2005. "Collusion Theory in Search of Robust Themes: A Comment on Switgard Feuerstein's Survey," Journal of Industry, Competition and Trade, Springer, vol. 5(3), pages 207-215, December.
    4. João Correia-da-Silva & Joana Pinho & Hélder Vasconcelos, 2014. "Sustaining collusion in markets with a general evolution of demand," FEP Working Papers 537, Universidade do Porto, Faculdade de Economia do Porto.
    5. McGahan, A M, 1995. "Cooperation in Prices and Capacities: Trade Associations in Brewing after Repeal," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 521-559, October.

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