Price Wars and the Stability of Collusion: A Study of the Pre-World War I Bromine Industry.
Between 1885 and 1914, U.S. bromine producers colluded to raise prices and profits. This collusion was disrupted by price wars. Bromine price wars are compared with the Green-Porter (1984) and Abreu-Pearce-Stacchetti (1986) models. Some price wars resulted from the imperfect monitoring problems which motivate these models. Several empirical implications of the Abreu-Pearce-Stacchetti model are borne out but the bromine industry's price wars were generally milder than contemplated by their model. More severe price wars were part of a bargaining process in which firms tried to force renegotiation to a new collusive equilibrium with a different distribution of rents. Copyright 1997 by Blackwell Publishing Ltd
Year of publication: |
1997
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Authors: | Levenstein, Margaret C |
Published in: |
Journal of Industrial Economics. - Wiley Blackwell. - Vol. 45.1997, 2, p. 117-37
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Publisher: |
Wiley Blackwell |
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