Booms, busts and behavioural heterogeneity in stock prices
In: Journal of economic dynamics & control, Band 80, S. 101-124
ISSN: 0165-1889
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In: Journal of economic dynamics & control, Band 80, S. 101-124
ISSN: 0165-1889
In: The B.E. journal of economic analysis & policy, Band 14, Heft 1, S. 189-202
ISSN: 1935-1682
Abstract
We show that incomplete cartels in quantity-setting oligopolies may increase welfare, without any efficiencies or synergies being internalized by cartel formation. The main intuition is that the cartel has an incentive to contract output and that the firms outside the cartel react to this by expanding output. If the outsiders are more efficient than the cartel firms, average production costs go down. We model collusion in a market structure with imperfect substitute goods. Even for relatively moderate differences in efficiency, total welfare may increase due to this market-induced rationalization, whereas the cartel remains profitable. We discuss why the effect can be relevant for sectors where new, superior products are developed. Because anti-cartel enforcement is costly, it is important for competition authorities to realize that not all cartels lead to a welfare loss.
In: De Nederlandsche Bank Working Paper No. 348
SSRN
Working paper
In: Sociaal bestek: tijdschrift voor werk, inkomen en zorg, Band 79, Heft 2, S. 13-15
ISSN: 2468-1377
In: Journal of economic dynamics & control, Band 119, S. 103972
ISSN: 0165-1889
In: De Nederlandsche Bank Working Paper No. 528
SSRN
Working paper