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http://dspace.mediu.edu.my:8181/xmlui/handle/10261/1873| Title: | Countervailing Power? Collusion in Markets with Decentralized Trade |
| Keywords: | Decentralized Trade Pairwise bargaining Bilateral cartel fornation Cartel stability Countervailing power |
| Description: | Trabajo publicado como artículo en Review of Economic Design 15(2):91-120(2009).-- http://dx.doi.org/10.1007/s10058-009-0093-8 We consider the collective incentives of buyers and sellers to form cartels in markets where trade is realized through decentralized pairwise bargaining. Cartels are coalitions of buyers or sellers that limit market participation and compensate inactive members for abstaining from trade. In a stable market outcome, cartels set Nash equilibrium quantities and cartel memberships are immune to defections. We prove that the set of stable market outcomes is non-empty and we provide its full characterization. Stable market outcomes are of two types: (i) at least one cartel actively restrains trade and the levels of market participation are balanced, or (ii) only one cartel, eventually the cartel that forms on the long side of the market, is active and it reduces trade slightly below the opponent's. We acknowledge financial support from the Catalan Government (grants 2000BEAI200120 to Burani and 2000SGR-0054 to Ponsati) and the Spanish Ministry of Education (grants PB98-970 and PR2000-0143 to Ponsati). |
| URI: | http://dspace.mediu.edu.my:8181/xmlui/handle/10261/1873 |
| Other Identifiers: | http://hdl.handle.net/10261/1873 |
| Appears in Collections: | Digital Csic |
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