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Tacit collusion in a one-shot game of price competition with soft capacity constraints

Abstract : This paper analyses price competition in the case of two firms operating under constant returns to scale with more than one production factor. Factors are chosen sequentially in a two-stage game generating a soft capacity constraint and implying a convex short term cost function in the second stage of the game. We show that tacit collusion is the only predictable result of the whole game i.e. the unique payoff-dominant pure strategy Nash equilibrium. Technically, this paper bridges the capacity constraint literature on price competition and that of the convex cost function.
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https://hal.archives-ouvertes.fr/hal-00709093
Contributor : Nicolas Drouhin Connect in order to contact the contributor
Submitted on : Thursday, October 4, 2012 - 4:12:22 PM
Last modification on : Tuesday, October 19, 2021 - 4:16:49 PM
Long-term archiving on: : Saturday, January 5, 2013 - 3:59:49 AM

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  • HAL Id : hal-00709093, version 2

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Marie-Laure Cabon-Dhersin, Nicolas Drouhin. Tacit collusion in a one-shot game of price competition with soft capacity constraints. 2012. ⟨hal-00709093v2⟩

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