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Colluding on excluding

IntégréTéléchargement
 Colluding on excluding
Cédric ARGENTON
Tilburg University
Abstract
In an oligopoly characterized by barriers to (re-)entry, a finite horizon,
complete information, convex costs, and the presence of three identical firms,
I show that in subgame-perfect equilibrium two of them (the predators) can
choose to charge an initial price that is so low that the third (the prey) decides
to exit immediately. In this predatory pricing equilibrium, the predators can
enjoy higher profits than in the best collusive equilibrium with three firms.
Thus, a coalition of two firms can benefit from colluding on excluding.
Monday, March 21, 2016 – 4:00 p.m. – Room b - 135
Center for Operations Research and Econometrics
Voie du Roman Pays 34, 1348 Louvain-la-Neuve
http://www.uclouvain.be/en-43677.html
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