(Un)stable vertical collusive agreements

Jaskold Gabszewicz, Jean;Zanaj, Skerdilajda
(2015) Canadian Journal of Economics — Vol. 48, n° 3, p. 924-939 (2015)

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  • Jaskold Gabszewicz, JeanUCLouvain
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  • Zanaj, Skerdilajda
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Abstract
In this paper, we extend the concept of stability to vertical collusive agreements involving downstream and upstream firms, using a setup of successive Cournot oligopolies. We show that a stable vertical agreement, the unanimous vertical agreement involving all downstream and upstream firms, always exists. Thus, stable vertical collusive agreements exist even for market structures in which horizontal cartels would be unstable. We also show that there are economies for which the unanimous agreement is not the only stable one. Furthermore, the Stigler statement according to which the only ones who benefit from a collusive agreement are the outsiders need not be valid in vertical agreements.
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Jaskold Gabszewicz, J., & Zanaj, S. (2015). (Un)stable vertical collusive agreements. Canadian Journal of Economics, 48(3), 924-939. https://hdl.handle.net/2078.5/218220 (Original work published 2015)