Stabsseminar på samfunn

Mandag 24. mai holder Institutt for samfunnsøkonomi stabsseminar. Seminaret er ved Kyle Bagwell ved Columbia University. Temaet er "Collusion with persistent cost shocks"

19.05.2004 - Stig Nøra

Tid: Mandag 24. mandag klokken 10.15-11.30
Sted: Auditorium E

Merk tidspunktet!

Abstract
We consider an infinitely repeated Bertrand game, in which
prices are publicly observed and each firm receives a privately observed
cost shock in each period. Although cost shocks are independent across
firms, within a firm costs follow a first-order
Markov process. We analyze the set of collusive equilibria available to
firms, emphasizing the best collusive scheme for the firms at the start
of the game. In general, there is a tradeoff between productive
efficiency, whereby the low-cost firm serves the market in a given
period, and high prices. We show that when costs are perfectly
correlated over time within a firm, if the distribution of costs is log
concave and firms are sufficiently patient, then the optimal collusive
scheme entails price rigidity: firms set the same price and share the
market equally, regardless of their respective costs. Full
productive efficiency can be achieved in equilibrium under some
circumstances, but such equilibria are not optimal. When serial
correlation of costs is imperfect, some productive efficiency is
typically optimal. For the case of two cost types, first-best collusion
is possible if the firms are very patient relative to the persistence of
cost shocks, but not otherwise. We present numerical examples of
first-best collusive schemes.

Paper kan hentes elektronisk på http://www.nhh.no/sam/stabssem/2004/bagwell.pdf

Kontaktperson på instituttet er Hans Jarle Kind (tlf. 59590).