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| Author: | Montero, J-P. Guzman, J.I. |
| Title: | Output-expanding collusion in the presence of a competitive fringe |
| Journal: | Journal of Industrial Economics
2010 : MAR, VOL. 58:1, p. 106-126 |
| Index terms: | models competition suppliers cartels business cycles |
| Freeterms: | collusion |
| Language: | eng |
| Abstract: | This study considers a few large firms and a competitive fringe of many small suppliers choosing quantities in an infinite horizon setting subject to demand shocks. It is shown that a collusive agreement among the large firms may bring an output contraction and also an output expansion. The latter occurs during booms and is due to the strategic substitutability of quantities. Moreover, it is also found that the time at which maximal collusion is most difficult to maintain can be either at booms or recessions. The international copper cartel of 1935-39 is used to clarify some of the study results. |
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