Optimal Collusion in Repeated Cournot Oligopoly Games
by
Harrison Cheng
Department of Economics, University of Southern California

We give a complete solution to the optimal collusion problem in repeated Cournot oligopoly games with symmetric firms and constant cost of production. Moral hazard problems are due to unobservable individual firm outputs, and the market price is the only observable signal for triggering rewards or punishments. Demand is assumed to be deterministic so that deviation is observable but not identifiable. Computational algorithms for the maximum and minimum equilibrium profits are developed. A version of the Folk theorems with moral hazards are also given.

Date received: May 5, 2000

Copyright © 2000 by the author(s). The author(s) of this document and the organizers of the conference have granted their consent to include this abstract in Atlas Mathematical Conference Abstracts. Document # cafc-11.