Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
Home

About this journal
   Aims and scope

   Editorial board

Submit your article

Archive

Search

Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Cournot duopoly and tacit collusion under fairness and reciprocal preferences

Vol.28, No.4, December , 22–39



  •   (Department of Economics, Sogang University)

PDF
Abstract  

This paper studies the impact of fairness and reciprocity on collusion between firms competing in quantities in infinitely repeated games. A reciprocal firm responds to unkind behavior of rivals with unkind actions (destructive reciprocity), while at the same time, it responds to kind behavior of rivals with kind actions (constructive reciprocity). The paper shows that when firms are reciprocal, collusive quantity profiles are easier to sustain for reasonable perceptions of fair quantities of rivals. However, if only very low quantities deemed as fair, then sustaining collusion could be more difficult when the firms have fairness concerns.


Keywords
   Fairness; Reciprocity; Collusion; Cournot Duopoly; Repeated Games

JEL classification codes
   D43, D63, L13, L21
Links

KCI list
Korean ES
JETEM at SCOPUS

Powered by MathJax