Cartel formation and managerial incentives

  1. Olaizola, Norma
Zeitschrift:
Spanish economic review

ISSN: 1435-5469

Datum der Publikation: 2007

Ausgabe: 9

Nummer: 3

Seiten: 219-236

Art: Artikel

DOI: 10.1007/S10108-006-9023-X DIALNET GOOGLE SCHOLAR

Andere Publikationen in: Spanish economic review

Zusammenfassung

We study the formation of cartels within two different contexts. First, we consider internal–external stability based models which, due to firms’ free-riding incentives, lead to the inexistence of stable cartels. Second, we introduce the dynamic aspect of coalition formation. That is, when considering a cartel we consider also any cartel that can be reached through a succession of moves. Despite firms’ free-riding incentive, the dynamic process predicts that the collusion of the whole industry can occur with some regularity. We show that free-riding incentives decrease and incentives to merge increase when firms’ owner delegate production decisions to managers.

Bibliographische Referenzen

  • Aumann R (1959) Acceptable points in general cooperative n-person games. Ann Math Stud 40:287–324
  • D’ Aspremont CA, Jacquemin A, Gabszewicz JJ, Weymark J (1983) On the stability of collusive price leadership. Can J Econ 16:17–25
  • Bernheim BD, Peleg B, Whinston MD (1987a) Coalition-proof Nash equilibria. I Concepts. J Econ Theory 42:1–12
  • Bernheim BD, Peleg B, Whinston MD (1987b) Coalition-proof Nash equilibria. II Applications. J Econ Theory 42:13–29
  • Fershtman C, Judd K (1987) Equilibrium incentives in oligopoly. Am Econ Rev 77:927–940
  • Inarra E, Kuipers J, Olaizola N (2002) Absorbing sets in coalitional systems. University of the Basque Country, Biltoki
  • Kalai E, Pazner EA, Schmeidler D (1976) Admissible outcomes of social bargaining processes as collective choice correspondence. J Econ Theory 63:299–325
  • Nash J (1950) Equilibrium points in n-person games. Proc Nat Acad Sci 36:48–49
  • Salant SW, Switzer S, Reynolds RJ (1983) Losses from horizontal merger: the effects of an exogenous change in industry structure on Cournot-Nash equilibrium. Q J Econ 98:185–199
  • Shenoy L (1979) On coalition formation: a game theoretical approach. Int J Game Theory 8:133–164
  • Schwartz T (1974) Notes on the abstract theory of collective choice. School of Urban and Public Affairs, Carnegie-Mellon University
  • Sklivas SD (1987) The strategic choice of management incentives. Rand J Econ 18:452–458
  • Thoron S (1998) Formation of a coalition-proof stable cartel. Can J Econ 31:63–76
  • Vickers J (1985) Delegation and the theory of the firm. Econ J 43:138–147
  • Von Neumann J, Morgenstern O (1944) Theory of games and economic behavior, 3rd edn. Princeton University Press, Princeton
Fuente de los datos: Dialnet