Type of Publication:  Journal article 
URI (citable link):  http://nbnresolving.de/urn:nbn:de:bsz:352opus84199 
Author:  Bruttel, Lisa 
Year of publication:  2009 
Published in:  Journal of Economics ; 96 (2009), 2.  pp. 113136 
DOI (citable link):  https://dx.doi.org/10.1007/s0071200800485 
Summary: 
This paper considers the stability of tacit collusion in price setting duopolies with repeated interaction. The minimum discount factor above which tacit collusion can be sustained in a subgame perfect equilibrium is called the critical discount factor delta*. In addition, delta* is often used as an intuitive measure for the stability of a tacit cartel, assuming that a collusive equilibrium is more difficult to sustain when delta* increases. However, according to standard theory the distance delta  delta* between the actual and the critical discount factor does not matter for stability as long as delta > delta*. This paper contributes experimental evidence that supports the intuitive idea that a larger critical discount factor makes collusion a less likely outcome.

JEL Classification:  C71; C91; L13 
Subject (DDC):  330 Economics 
Keywords:  Price collusion, Critical discount factor, Experiment 
Link to License:  In Copyright 
Bibliography of Konstanz:  Yes 
BRUTTEL, Lisa, 2009. The critical discount factor as a measure for cartel stability?. In: Journal of Economics. 96(2), pp. 113136. Available under: doi: 10.1007/s0071200800485
@article{Bruttel2009criti11944, title={The critical discount factor as a measure for cartel stability?}, year={2009}, doi={10.1007/s0071200800485}, number={2}, volume={96}, journal={Journal of Economics}, pages={113136}, author={Bruttel, Lisa} }
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