The size of stable cartels: An analytical approach

Abstract

In this paper, we revisit the size of stable cartels in a symmetric oligopoly model with a Cournot fringe. Konishi and Lin (1999) make a conjecture on the size of stable cartels. Due to algebra complexity, they test the conjecture by conducting numerical simulations. We provide an analytical approach to determine the size of stable cartels, and show that the size of stable cartels is slightly larger than the one in their conjecture. Furthermore, we find that the uniqueness of the stable cartel in Konishi and Lin (1999) could not always hold.