Document Type
Discussion Paper
Publication Date
6-1-1983
CFDP Number
668
CFDP Pages
25
Abstract
We study a model in which collusive duopolists divide up the monopoly profit according to their relative bargaining power. We are particularly interested in how the negotiated profit shares depend on the sizes of the firms. If each can produce at the same constant unit cost up to its capacity, we show that the profit per unit of capacity of the small firm is higher than that of the large one. We also study how the ratio of the negotiated profits depends on the size of demand relative to industry capacity, and how this ratio changes with variations in demand.
Recommended Citation
Osborne, Martin J. and Pitchik, Carolyn, "Profit-Sharing in a Collusive Industry" (1983). Cowles Foundation Discussion Papers. 901.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/901