Skip to main content
SpringerLink
Log in

CooperationV. Rivalry and factors facilitating collusion

  • Published:
Review of Industrial Organization Aims and scope Submit manuscript

Abstract

A perennial topic in industrial economics is collusion. Kwoka and Ravenscraft (1986) developed a model to measure the collusiveness of conjectures across industries as a function of intra-industry rivalry among leading firms. But extensive literature suggests that the degree of collusion may also depend upon underlying market characteristics. We modify the Kwoka and Ravenscraft model to account for this. Our results suggest that underlying market characteristics do matter. Intra-industry rivalry and conjectures vary with the level and stability of concentration, and to a lesser degree with product homogeneity.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Benston, George J. (1985) ‘The Validity of Profits-Structure Studies with Particular Reference to the FTC's Line of Business Data’,American Economic Review,75, 37–67.

    Google Scholar 

  • Clarke, Roger and Stephen Davies (1982) ‘Market Structure and Price-Cost Margins’,Economica,49, 277–287.

    Google Scholar 

  • Cossutta, Dario and Michele Grillo (1986) ‘Excess Capacity, Sunk Costs and Collusion: A Non-Cooperative Bargaining Game’,International Journal of Industrial Organization,4, 251–270.

    Google Scholar 

  • Cowling, Keith and Michael Waterson (1976) ‘Price-Cost Margins and Market Structure’,Economica,43, 267–274.

    Google Scholar 

  • Friedman, James (1983)Oligopoly Theory, Cambridge: Cambridge University Press.

    Google Scholar 

  • Green, Edward and Robert H. Porter (1984) ‘Noncooperative Collusion Under Imperfect Price Information’,Econometrica,52, 87–100.

    Google Scholar 

  • Hay, George A. and Daniel Kelley (1974) ‘An Empirical Survey of Price Fixing Conspiracies’,Journal of Law and Economics,17, 13–38.

    Google Scholar 

  • Judge, George G., R. Carter Hill, William Griffiths, Helmut Lütkepohl and Tsoung-Chao Lee (1985)The Theory and Practice of Econometrics, 2nd Edition, New York: John Wiley and Sons.

    Google Scholar 

  • Kmenta, Jan (1986)Elements of Econometrics, 2nd Edition, New York: MacMillan.

    Google Scholar 

  • Kwoka, John E. Jr., and David J. Ravenscraft (1986) ‘Cooperationv. Rivalry: Price-Cost Margins by Line of Business’,Economica,53, 351–363.

    Google Scholar 

  • Martin, Stephen (1983) ‘Market, Firm, and Economic Performance’, New York University Monograph.

  • Posner, Richard A. (1976)Antitrust Law: An Economic Perspective, Chicago: University of Chicago Press.

    Google Scholar 

  • Ravenscraft, David J. (1982) ‘Structure-Profit Relationships at the Line of Business and Industry Level’, Federal Trade Commission Working Paper.

  • Ravenscraft, David J. (1983) ‘Structure-Profit Relationships at the Line of Business and Industry Level’,Review of Economics and Statistics,65, 22–31.

    Google Scholar 

  • Rotemberg, Julio J. and Gaith Saloner, (1986) ‘A Supergame-Theoretic Model of Price Wars during Booms’,American Economic Review,76, 390–907.

    Google Scholar 

  • Scherer, F.M. and D. Ross (1990)Industrial Market Structure and Economic Performance, Chicago: Rand McNally.

    Google Scholar 

  • Scherer, F.M., William F. Long, Stephen Martin, Dennis C. Mueller, George Pascoe, David J. Ravenscraft, John T. Scott and L. W. Weiss. (1987) ‘The Validity of Studies with Line of Business Data: Comment’,American Economic Review,77, 205–217.

    Google Scholar 

  • Shepherd, William G. (1990)The Ecomonics of Industrial Organization, 3rd Edition, New York: Prentice Hall.

    Google Scholar 

  • Smith, Adam (1937)An Inquiry into the Nature and Causes of the Wealth of Nations, New York: Modern Library.

    Google Scholar 

  • Tirole, Jean (1988)The Theory of Industrial Organization, Cambridge: MIT Press.

    Google Scholar 

  • Weiss, Leonard W. (1974) ‘The Concentration-Profits Relationship and Antitrust’, in Harvey J. Goldschmid, H. Michael Mann and J. Fred Weston (eds.)Industrial Concentration: The New Learning, 184–233 Boston: Little Brown and Co.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, University of Nebraska, 68588-0489, Lincoln, NE, USA

    David I. Rosenbaum

  2. Division of Business and Economics, Doane College, 68333, Crete, NE, USA

    Leslie D. Manns

Authors
  1. David I. Rosenbaum
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Leslie D. Manns
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

This research was supported, in part, by a grant from the American Philosophical Society. We thank Curtis Wagner and George Pascoe of the Federal Trade Commission for their invaluable assistance. We also greatly appreciate comments by James W. Brock, Douglas F. Greer, Joseph E. Harrington, Richard A. Miller, Stephen Martin, John T. Scott, and anonymous referees.

The representations and conclusions presented herein are those of the authors. They have not been adopted in whole or in part by the Federal Trade Commission, the Bureau of Economics, or any other entity within the Commission. The Federal Trade Commission's Disclosure Avoidance Officer has certified that the data included in the paper do not identify individual company line of business data.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Rosenbaum, D.I., Manns, L.D. CooperationV. Rivalry and factors facilitating collusion. Rev Ind Organ 9, 823–838 (1994). https://doi.org/10.1007/BF01026587

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF01026587

Keywords

Search

Navigation