Noncooperative Collusion in Durable Goods Oligopoly
Volume: Volume 18, No. 2
Issue: Summer 1987
Pages: pp. 248-254
Authors: Faruk Gul
Title: Noncooperative Collusion in Durable Goods Oligopoly
Abstract: Coase conjectured that a durable goods monopolist who can make offers to sell arbitrarily frequently will lose the ability to extract positive profits. This result, which has now been proved, can be attributed to the inability of the monopolist to commit to maintaining sufficiently high prices in the near future. For the case of durable-goods oligopoly, we show that letting the firms make offers arbitrarily frequently enhances their ability to commit to high prices and in the limit enables the firms to enjoy total market profits equal to the full commitment (one-shot) monopoly profit.
JEL Classification
Microeconomics Theory of Firm and Industry under Imperfectly Competitive Market Structures (0226)
Game Theory and Bargaining Theory (0262)
Market Structure: Industrial Organization and Corporate Strategy (6110)