Optimal Collusion with Limited Severity Constraint ∗

@inproceedings{Villemeur2009OptimalCW,
  title={Optimal Collusion with Limited Severity Constraint ∗},
  author={Etienne Billette de Villemeur and Laurent Flochel and Bruno Versaevel},
  year={2009}
}
Collusion sustainability depends on firms’ aptitude to impose sufficiently severe punishments in case of deviation from the collusive rule. We characterize the ability of oligopolistic firms to implement a collusive strategy when their ability to punish deviations over one or several periods is limited by a severity constraint. It captures all situations in… CONTINUE READING