We consider a simple Stackelberg model with demand uncertainty only for the first mover in order to compare the … the presence of demand uncertainty. We find that only when the realized demand is in an intermediate zone does the first … mover preserve its advantage; when the realized demand is far from its expected value, the second mover obtains higher …

relative to total demand, the fragmentation of capacity facilitates collusion and increases the highest sustainable collusive …

who invest into production capacity, sell a near-homogeneous good, and are subject to unexpected demand shocks with … persistence. The firms either compete or collude in prices. The model shows that a reduction of demand may promote collusion … despite lowering collusive profits. This is the case when capacities are durable and a perceptible decline in demand creates …