Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271814 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 10170
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study an infinitely repeated oligopoly game in which firms compete on quantity and one of them is capacity constrained. We show that collusion sustainability is non-monotonic in the size of the capacity constrained firm, which has little incentive to deviate from a cartel. We also present conditions for the emergence of a partial cartel, with the capacity constrained firm being excluded by the large firms or self-excluded. In the latter case, we show under which circumstances the small firm induces a partial conspiracy that is Pareto-dominant. Implications for cartel identification and enforcement are finally discussed.
Subjects: 
antitrust
capacity constraints
collusion
partial cartel
JEL: 
D21
L13
L41
Document Type: 
Working Paper
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