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Localized Competition, Multimarket Operation and Collusive Behavior

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  • Frank Verboben

Abstract

This paper studies collusive behavior in a repeated oligopoly model with localized competition. Private information about the rivals' past actions naturally arises from this product market structure. The resulting communication problems imply that firms should adopt strategies with sufficiently lenient punishments. Infinite grim punishments are too severe for large discount factors. The standard stick-and-carrot punishments from the perfect public information model are too severe for all discount factors. Modified stickand- carrot punishments can be used, though for a smaller range of discount factors than the standard stick-and-carrot punishments under public information. ZUSAMMENFASSUNG - (Lokaler Wettbewerb, Multimarkt-Strategien und kollusives Verhalten) In diesem Beitrag wird das kollusive Verhalten in einem Oligopolmodell mit lokalem Wettbewerb untersucht. Private Information über die Aktionen des Konkurrenten resultieren normalerweise aus der Produkt-Marktstruktur. Das daraus folgende Kommunikationsproblem bedeutet, daß Unternehmen jene Strategien anwenden sollten, die moderat im Hinblick auf Bestrafung sind. Uneingeschränkt harte Strafen sind beim Vorliegen hoher Abzinsungsfaktoren zu schwerwiegend. Die übliche "Zuckerbrot und Peitsche"- Bestrafung des Modells mit vollständig öffentlicher Information sind für alle Abzinsungsfaktoren zu hart. Eine modifizierte "Zuckerbrot und Peitsche"-Bestrafung kann verwendet werden, jedoch nur für einen engeren Bereich von Abzinsungsfaktoren als dies für die Standard "Zuckerbrot und Peitsche"-Bestrafung gilt.

Suggested Citation

  • Frank Verboben, 1997. "Localized Competition, Multimarket Operation and Collusive Behavior," CIG Working Papers FS IV 97-03, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    • Handle: RePEc:wzb:wzebiv:fsiv97-3
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    References listed on IDEAS

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