Collusion with Capacity Constraints over the Business Cycle

Publication:
Collusion with Capacity Constraints over the Business Cycle

dc.affiliation.dpto	UC3M. Departamento de Economía	es
dc.contributor.author	Fabra, Natalia
dc.contributor.other	EconWPA
dc.date.accessioned	2009-08-27T14:24:47Z
dc.date.available	2009-08-27T14:24:47Z
dc.date.issued	2003
dc.description.abstract	This paper investigates the e®ect of capacity constraints on the sustainability of collusion in markets subject to cyclical demand °uctuations. In the absence of capacity constraints (i.e. a limiting case of our model), Haltiwanger and Harrington (1991) show that ¯rms ¯nd it more di±cult to collude during periods of decreasing demand. We ¯nd that this prediction can be overturned if ¯rms' capacities are su±ciently small. Capacity constraints imply that punishment pro¯ts move procyclically, so that periods of increasing demand may lead to lower losses from cheating even if collusive pro¯ts are rising. Haltiwanger and Harrington's main prediction remains valid for su±ciently large capacities.
dc.format.mimetype	application/pdf
dc.identifier.uri	https://hdl.handle.net/10016/5006
dc.language.iso	eng
dc.relation.hasversion	http://hdl.handle.net/10016/5005
dc.relation.ispartofseries	Working paper
dc.rights.accessRights	open access
dc.subject.eciencia	Economía
dc.subject.other	Collusion
dc.subject.other	Capacity constraints
dc.subject.other	Business cycles
dc.title	Collusion with Capacity Constraints over the Business Cycle
dc.type	working paper	*
dspace.entity.type	Publication

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