We consider a symmetric cartel formation game where the cartel, once formed, acts as a Stackelberg quantity leader and the nonmember firms play the Cournot game with respect to the residual demand. We show the existence of a stable cartel under fairly general demand and cost conditions. We also compare by means of numerical examples the size of stable cartels in our model with that in the price leadership model of d'Aspremont et al.
|Number of pages||10|
|Journal||Keio Economic studies|
|Publication status||Published - 1 Oct 1999|
- Cournot fringe
- Stable cartel
- Stackelberg quantity leader