S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics (SJE) Seoul Journal of Economics vol.02(2) (Summer 1989)
A Multimarket Supergame between Two Heterogeneous Conglomerates
- Bae, Hyung
- Issue Date
- Seoul Journal of Economics, Vol.2 No.2, pp. 131-142
- This paper studies a price-setting supergame between two two-market firms with different costs. The two firms may be able to sustain collusion when independent specialists could not do in either market. When independent specialists can sustain collusion in both markets, the two firms can sustain collusion better unless the ratios of their margins are the same in the two markets. Unless the ratios are the same, some market will be monopolized by the firm whose margin is relatively higher in the market in collusion optimal to the firms. In contrast to optimal collusion between two independent specialists, prices can be lower than the monopoly-profit-maximizing prices of the lower-cost firms in optimal collusion between the two firms.