Stability of Cartels in Multimarket Cournot Oligopolies

Chakrabarti, Subhadip, Gilles, Robert P. and Lazarova, Emiliya (2020) Stability of Cartels in Multimarket Cournot Oligopolies. The Manchester School. ISSN 1463-6786 (In Press)

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We investigate the stability of cooperation agreements, such as those agreed by cartels, among firms in a Cournot model of oligopolistic competition embedded in a multimarket contact setting. Our analysis considers a broad array of 64 potential market structural configurations under linear demand and quadratic production costs. We establish that for an appropriate range of parameter values there exists a unique core stable market configuration in which an identical two-firm cartel is sustained in both markets. Our result highlights the significance of multimarket presence for cartel formation in light of the well-known result from the single-market setting where cartels are non-profitable.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: LivePure Connector
Date Deposited: 02 Sep 2020 23:53
Last Modified: 02 Sep 2020 23:54

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