Theoretical and Applied Economics
No. 1 / 2014 (590)
Stochastic evolutionary cartel formation
Nanjing University, Nanjing
Kunrong SHEN
Nanjing University, Nanjing
Abstract. This paper employs the evolutionary dynamics driven by the Moran process (a special birth-death process) to investigate endogenous cartel formation from the perspective of stochastic evolution of the underlying industry. A Prisoner’s Dilemma game is derived based on the Cournot competition between any two firms. Moreover, in a repeated setting, we consider the normal-form game between two well-known behavior modes: cooperative strategy tit-for-tat (TFT) and non- cooperative strategy always defect (ALLD). We then give the corresponding conditions under which full collusion and partial collusion are established, respectively, in stochastic evolutionary sense. Finally, both the threshold of discount factor and the threshold of industry concentration are endogenously determined in the model.
Contents
Stochastic evolutionary cartel formation
Earnings analysis at industry level
Analysis of the correlation between the real estate loan stock and the average unit value of urban housing
Debt and economic growth: Is there any causal effect? An empirical analysis with structural breaks and Granger causality for Greece
Behavioral finance: biased individual investment decision making; like the company but dislike the investment
The role of community foundations in local development – Slovak experience
The role of small and medium enterprises in improving employment and in the post-crisis resumption of economic growth in Romania
The issue of competing currencies. Case study – Bitcoin
Test of the bank lending channel: The case of Hungary
The dimensions of the global financial crisis
Budgeting mechanisms in public administration – meeting today’s and tomorrow’s development challenges