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Cartel Sustainability and Cartel Stability

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Working paper
Author/s: 
Marc Escrihuela-Villar
Issue number: 
2004.044
Publisher: 
FEEM
Year: 
2004
The paper studies how does the size of a cartel affect the possibility that its members can sustain a collusive agreement. I obtain that collusion is easier to sustain the larger the cartel is. Then, I explore the implications of this result on the incentives of firms to participate in a cartel. Firms will be more willing to participate because otherwise, they risk that collusion completely collapses, as remaining cartel members are unable to sustain collusion.
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