Games, Volume 16, Issue 5
2025 October - 15 articles
Cover Story: We study stochastic cooperation between non-mutually dependent sellers via a hybrid game class parametrized by the exogenous probability of cooperation. Both sellers, aware of this probability, simultaneously choose prices that determine their endogenous threats, i.e., conflict profits, but cannot condition on whether or not there is cooperation. We show that the independent seller earns higher expected profits when cooperation is more likely. In contrast, the dependent seller earns lower expected profits when the likelihood of cooperation is below a threshold that we characterize, and higher profits are earned thereafter. These findings suggest that, within our framework, antitrust concerns may be mitigated. Since dependent sellers can incur losses from cooperation, and collusion attempts become less viable in markets with one-sided dependency. View this paper - Issues are regarded as officially published after their release is announced to the table of contents alert mailing list .
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