Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2003-12-23
Number: 03-104/1
Author-Name: J. Hinloopen
Author-Email: j.hinloopen@uva.nl
Author-Workplace-Name: Faculty of Economics and Econometrics, Universiteit van Amsterdam
Title: Cartel Stability with Time-dependent Detection Probabilities
Abstract: To account for the illegal nature of price-fixing agreements, detection probabilities are introduced in a dynamic oligopoly. It follows that for a trigger strategy to sustain a non-cooperative collusive equilibrium as a SPNE both the discount rate and all per-period detection probabilities have to be `low enough'. Also, the domain reduces for which strictest incentive compatibility constraint is binding of the concomitant non-stationary supergame if (i) any per-period detection probability increases, (ii) prospective fine payments are increased, (iii) the period of limitation is reduced for violating antitrust laws.
Classification-JEL: L12; L41
Keywords: Cartel stability; trigger strategy; detection probabilities; period of limitation
File-Url: https://papers.tinbergen.nl/03104.pdf
File-Format: application/pdf
File-Size: 375848 bytes
Handle: RePEc:tin:wpaper:20030104