Item

Colluding on excluding

Argenton,Cedric
Abstract
In an oligopoly characterized by barriers to (re-)entry, a finite horizon, complete information, convex costs, and the presence of three identical firms, I show that in subgame-perfect equilibrium two of them (the predators) can choose to charge an initial price that is so low that the third (the prey) decides to exit immediately. In this predatory pricing equilibrium, the predators can enjoy higher profits than in the best collusive equilibrium with three firms. Thus, a coalition of two firms can benefit from colluding on excluding.
Description
Date
2019-04
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Tilburg University Research Output Collection
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Keywords
Cartels, Collusion, predatory pricing, Bertrand competition, Anticompetitive practice, D43 - Oligopoly and Other Forms of Market Imperfection, L13 - Oligopoly and Other Imperfect Markets, L41 - Monopolization ; Horizontal Anticompetitive Practices
Citation
Argenton, C 2019, 'Colluding on excluding', European Economic Review, vol. 113, pp. 194-206. https://doi.org/10.1016/j.euroecorev.2019.01.006
URI
https://hdl.handle.net/20.500.14602/70782
License
info:eu-repo/semantics/closedAccess
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