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Welfare-enhancing collusion in the presence of a competitive fringe

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dc.contributor.author Montero, Juan-Pablo en_US
dc.contributor.author Guzmán, Juan Ignacio en_US
dc.contributor.other Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. en_US
dc.date.accessioned 2009-04-03T17:06:52Z
dc.date.available 2009-04-03T17:06:52Z
dc.date.issued 2005 en_US
dc.identifier 2005-011 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/45041
dc.description.abstract Following the structure of many commodity markets, we consider a reduced number of large firms and a competitive fringe of many small suppliers choosing quantities in an infinitehorizon setting subject to demand shocks. We show that a collusive agreement among the large firms may not only bring an output contraction but also an output expansion (relative to the non-collusive output level). The latter occurs during booms, when the fringe's market share is more important, and is due to the strategic substitutability of quantities (we will never observe an output expanding collusion in a price setting game). In addition and depending on the fringe's market share the time at which collusion is most difficult to sustain can be either at booms or recessions. en_US
dc.format.extent 21, [2] p en_US
dc.publisher MIT Center for Energy and Environmental Policy Research en_US
dc.relation.ispartofseries MIT-CEEPR (Series) ; 05-011WP. en_US
dc.title Welfare-enhancing collusion in the presence of a competitive fringe en_US
dc.type Working Paper en_US
dc.identifier.oclc 61710562 en_US


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