Within a simple model of differentiated oligopoly, we show that tacit collusion may be prevented by the threat of nationalising a private firm coupled with the appropriate choice of the weight given to private profits in the maximand of the nationalised company. This happens because the threat of nationalization eliminates the prisoners’ dilemma usually associated with a Cournot game among profit-seekers. We characterise the properties of such a threat and prove that it may allow the policy maker to credibly deter collusion.

Nationalization as Credible Threat Against Collusion / Flavio Delbono; Luca Lambertini. - In: JOURNAL OF INDUSTRY, COMPETITION AND TRADE. - ISSN 1573-7012. - STAMPA. - 16:(2016), pp. 127-136. [10.1007/s10842-015-0211-y]

Nationalization as Credible Threat Against Collusion

DELBONO, FLAVIO;LAMBERTINI, LUCA
2016

Abstract

Within a simple model of differentiated oligopoly, we show that tacit collusion may be prevented by the threat of nationalising a private firm coupled with the appropriate choice of the weight given to private profits in the maximand of the nationalised company. This happens because the threat of nationalization eliminates the prisoners’ dilemma usually associated with a Cournot game among profit-seekers. We characterise the properties of such a threat and prove that it may allow the policy maker to credibly deter collusion.
2016
Nationalization as Credible Threat Against Collusion / Flavio Delbono; Luca Lambertini. - In: JOURNAL OF INDUSTRY, COMPETITION AND TRADE. - ISSN 1573-7012. - STAMPA. - 16:(2016), pp. 127-136. [10.1007/s10842-015-0211-y]
Flavio Delbono; Luca Lambertini
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/567623
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