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Single-Valued Control of a Cartel under Uncertainty -- A Multifirm Comparison of Prices and Quantities

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  • Gary W. Yohe

Abstract

Homogeneous and hybrid price and quantity controls of a cartel seeking to maximize cumulative profits are compared within an uncertain economic environment. The primary determinant of the superior control is shown to be the relative influence each choice has on the variation in total output. A member firm's size, relative to the total output, and the correlation of its output with the outputs of the other firms are therefore crucial in predicting whether the firm should optimally face a price or a quantity. Extensions of the analysis to pollution control, agricultural supports, and planned economies are also outlined.

Suggested Citation

  • Gary W. Yohe, 1977. "Single-Valued Control of a Cartel under Uncertainty -- A Multifirm Comparison of Prices and Quantities," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 97-111, Spring.
    • Handle: RePEc:rje:bellje:v:8:y:1977:i:spring:p:97-111
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    Cited by:

    1. John Bennett, 2022. "Rationed price controls and “prices versus quantities”," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(6), pages 1364-1385, December.

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