Competitive and collusive behaviour in oligopoly

Single commodity, single criteria (= profit maximization) oligopolies are usually supposed to be competitive but they may, in fact, be collusive. We study observable symptoms of oligopolistic collusions and propose some indicators that assess the level of collusive co-operation among oligopolists. We investigate the case where the strategic variables of the oligopolists are amounts of supplies per unit of time (typically, one year) and where the unit price is specified as an equilibrium point between supply and demand. Alternatively, we also investigate the case where the unit price is a result of collusive agreements of some or all oligopolists. The potential collusive agreements may include side payments among oligopolists. The indicators measuring the collusive behaviour are based on deviations of the observable market parameters from the values corresponding to a Nash equilibrium solution of the Cournot type model of oligopoly.

Keywords: competition, oligopoly, collusion, Nash equilibrium