Optimal penal codes are constructed for a class of infinity-repeated games with discounting. These games can be interpreted as Bertrand oligopoly games with capacity constraints. No particular rationing rule is adopted; weak restrictions are imposed on the firms' sales functions instead. Models...

Profit rates differ across industries. Explanations have often relied on static models of imperfect competition. This paper develops a dynamic model of perfect competition to demonstrate that long-run average profit rates differ even across competitive industries when the effects of sunk costs...