, Volume 27, Issue 2, pp 107-124

The Collusive Equilibrium in a Quantity-Setting Supergame: An Application to Taiwan’s Flour Industry

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Abstract

This paper examines the stability of the collusive equilibrium in Friedman’s repeated game through an empirical study of Taiwan’s flour market. We calculate the payoff streams following a deviation or adherence for each firm. The evidence shows that the specified punishment path is credible, and could sustain the collusive allocation.