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Collusive price leadership with capacity constraints

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  • Ishibashi, Ikuo

Abstract

In this paper, collusive price leadership in homogeneous good capacity-constrained repeated price competition is examined. In the stage game, firms choose their timing of price setting. Although setting a price early is disadvantageous per se, a large firm has an incentive to move early in order to demonstrate its commitment not to deviate. If the discount factor is not too large, this behavior raises the collusive price compared to that arising in collusion with simultaneous moves. As a result, all firms obtain (strictly) higher profits.

Suggested Citation

  • Ishibashi, Ikuo, 2008. "Collusive price leadership with capacity constraints," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 704-715, May.
    • Handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:704-715
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    References listed on IDEAS

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    Cited by:

    1. Makoto Yano & Takashi Komatsubara, 2012. "Price Competition or Tacit Collusion," KIER Working Papers 807, Kyoto University, Institute of Economic Research.
    2. Mouraviev, Igor & Rey, Patrick, 2011. "Collusion and leadership," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 705-717.
    3. Mansley, Ryan & Miller, Nathan H. & Sheu, Gloria & Weinberg, Matthew C., 2023. "A price leadership model for merger analysis," International Journal of Industrial Organization, Elsevier, vol. 89(C).
    4. Fei Shi, 2008. "Endogenous Timing with Demand Uncertainty," TWI Research Paper Series 30, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    5. Nie, Pu-yan & Chen, You-hua, 2012. "Duopoly competitions with capacity constrained input," Economic Modelling, Elsevier, vol. 29(5), pages 1715-1721.
    6. Mark Dijkstra & Maarten Pieter Schinkel, 2019. "State-aided Price Coordination in the Dutch Mortgage Market," Tinbergen Institute Discussion Papers 19-014/VII, Tinbergen Institute, revised 13 Jul 2019.
    7. Pu-yan Nie, 2014. "Effects of capacity constraints on mixed duopoly," Journal of Economics, Springer, vol. 112(3), pages 283-294, July.
    8. Angela S. Bergantino & Claudia Capozza & Mauro Capurso, 2018. "Pricing strategies: who leads and who follows in the air and rail passenger markets in Italy," Applied Economics, Taylor & Francis Journals, vol. 50(46), pages 4937-4953, October.
    9. Trost, Michael, 2022. "Unraveling the spreading pattern of collusively effective competition clauses," Hohenheim Discussion Papers in Business, Economics and Social Sciences 01-2022, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    10. Ante Farm, 2017. "Pricing and price competition in consumer markets," Journal of Economics, Springer, vol. 120(2), pages 119-133, March.
    11. Gerlach, Heiko & Nguyen, Lan, 2021. "Price staggering in cartels," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    12. Ruda Zhang & Roger Ghanem, 2020. "Multi-market Oligopoly of Equal Capacity," Papers 2012.06742, arXiv.org.
    13. Daisuke Hirata & Toshihiro Matsumura, 2011. "Price leadership in a homogeneous product market," Journal of Economics, Springer, vol. 104(3), pages 199-217, November.
    14. Bos, A.M. & Wandschneider, F., 2011. "Cartel ringleaders and the corporate leniency program," Research Memorandum 038, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    15. Shakun Datta Mago & Emmanuel Dechenaux, 2009. "Price leadership and firm size asymmetry: an experimental analysis," Experimental Economics, Springer;Economic Science Association, vol. 12(3), pages 289-317, September.

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