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Article dans une revue Review of Industrial Organization Année : 2009

Yardstick competition, franchise bidding and firms' incentives to collude

Résumé

Collusion seems to be a pervasive problem when regional monopoly rights are auctioned to private firms. This leads us to study whether firms may collude if the regulator uses yardstick competition to simulate competitive forces, and how this is affected when both schemes are used. Using an infinitely repeated game framework, we find that collusion is sustainable when firms are sufficiently patient under yardstick competition. An additional franchise bidding mechanism can even help firms sustain collusion when they are impatient. When temporary monopoly rights are assigned for sufficiently long periods of time, collusion may not be sustainable even when firms are patient.
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Dates et versions

halshs-00479475, version 1 (30-04-2010)

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  • HAL Id : halshs-00479475 , version 1

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Chong Eshien, Freddy Huet. Yardstick competition, franchise bidding and firms' incentives to collude. Review of Industrial Organization, 2009, 35 (1), pp.149-169. ⟨halshs-00479475⟩
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