Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7355443 | International Review of Economics & Finance | 2018 | 8 Pages |
Abstract
We discuss government-leading welfare-improving collusion in a mixed duopoly. We formulate an infinitely repeated game in which a welfare-maximizing firm and a profit-maximizing firm coexist. The government proposes welfare-improving collusion and this is sustainable if both firms have incentives to follow it. We compare two competition structures-Cournot and Bertrand-in this long-run context. We find that Cournot competition yields greater welfare when the discount factor is sufficiently large, whereas Bertrand competition is better when the discount factor is small.
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Authors
Junichi Haraguchi, Toshihiro Matsumura,