Collusive market structure under learning-by-doing and increasing returns

Dilip Mookherjee, Debraj Ray

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Leaming-by-doing and increasing returns are often perceived to have similar implications for market structure and conduct. We analyse this in the context of an infinite-horizon price-setting game. Learning is shown to not reduce the viability of market-sharing collusion between a given number of firms, whereas intra-period increasing returns invariably does. We subsequently develop a model where the number of active firms is determined endogenously, under the assumption that the post-entry game is collusive. In this model, learning has no effect on concentration, while scale economies increase concentration.

    Original languageEnglish (US)
    Pages (from-to)993-1009
    Number of pages17
    JournalReview of Economic Studies
    Volume58
    Issue number5
    DOIs
    StatePublished - Oct 1991

    ASJC Scopus subject areas

    • Economics and Econometrics

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