@article{34c10c74e57647c4a04628270bd1ceac,
title = "Asymmetric collusion with growing demand",
abstract = "We characterize collusion sustainability in markets where demand growth triggers the entry of a new firm whose efficiency may be different from the efficiency of the incumbents. We find that the profit-sharing rule that firms adopt to divide the cartel profit after entry is a key determinant of the incentives for collusion (before and after entry). In particular, if the incumbents and the entrant are very asymmetric, collusion without side-payments cannot be sustained. However, if firms divide joint profits through bargaining and are sufficiently patient, collusion is sustainable even if firms are very asymmetric.",
keywords = "Collusion, Growing demand, Nash bargaining, Profit-sharing",
author = "Ant{\'o}nio Brand{\~a}o and Joana Pinho and H{\'e}lder Vasconcelos",
note = "Funding Information: Acknowledgments We are grateful to Paul Belleflamme, Pedro Pita Barros, Joseph Harrington, and, specially, Jo{\~a}o Correia-da-Silva for their helpful comments. We also thank the Editor, Michael Peneder, and three anonymous referees for their useful suggestions. We acknowledge the financial support from Fundac¸{\~a}o para a Ci{\^e}ncia e Tecnologia (PTDC/IIM-ECO/5294/2012). We thank the participants in the 39th EARIE Annual Conference in Rome, the 6th Meeting of the Portuguese Economic Journal in Porto, the 6th Economic Theory Workshop in Vigo, the 2012 UECE Lisbon Meeting on Game Theory and Applications and a seminar at U. Vigo. Joana Pinho acknowledges the support from Fundac¸{\~a}o para a Ci{\^e}ncia e Tecnologia (BPD/79535/2011). Publisher Copyright: {\textcopyright} 2013, Springer Science+Business Media New York. Copyright: Copyright 2015 Elsevier B.V., All rights reserved.",
year = "2013",
doi = "10.1007/s10842-013-0171-z",
language = "English",
pages = "429--472",
journal = "Journal of Industry, Competition and Trade",
issn = "1566-1679",
publisher = "Kluwer Academic Publishers",
}