Collusion in Expectations Management with Network Effects
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We study the collusion stability with network effects where firms commit to the output levels when consumers' expectations about firms' market shares are required to be fulfilled in equilibrium. We show that firms have an endogenous incentive to collude/compete/deviate from collusion under choosing commitment device. Contrast to previous works, under Cournot competition, the collusion choosing commitment to expectation becomes more sustainable for closer substitutes of products regardless of strength of network effects. Thus, we obtain different Pareto efficiency between commitment and no commitment in collusive behaviors of network industries.
Abstract
We study the collusion stability with network effects where firms commit to the output levels when consumers' expectations about firms' market shares are required to be fulfilled in equilibrium. We show that firms have an endogenous incentive to collude/compete/deviate from collusion under choosing commitment device. Contrast to previous works, under Cournot competition, the collusion choosing commitment to expectation becomes more sustainable for closer substitutes of products regardless of strength of network effects. Thus, we obtain different Pareto efficiency between commitment and no commitment in collusive behaviors of network industries.
참고문헌 (18)
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