Sustainable collusion in oligopoly with free entry
(1994) European Economic Review — Vol. 38, n° 2, p. 271-283 (1994)
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- Abstract
- We investigate the stability of collusion in a market where firms cannot prevent entry. In a symmetric, homogeneous oligopoly there are collusive long-run equilibria under which the colluders obtain positive economic rents while they do not prevent entry of firms up to a maximum equal to the largest number of firms sustainable at a single shot equilibrium. The collusion is not generous to new entrants; their profits are a little better than those associated with the discounted single shot equilibrium. Eventually entrants obtain profits equal to the incumbent firms. We extend the results to asymmetric, differentiated oligopolies.
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Friedman, J. W., & Thisse, J.-F. (1994). Sustainable collusion in oligopoly with free entry. European Economic Review, 38(2), 271-283. https://hdl.handle.net/2078.5/203912 (Original work published 1994)