### Abstract

In this chapter, the optimization by cartels that restricts outputs to enhance their joint profit is examined. In particular, we consider oligopolies in which firms agree to form a cartel to restrain output and enhance their profits. Some firms have cost disadvantages that force them to become dormant partners. In Sect. 7.1 a dynamic oligopoly in which there are cost differentials among firms is presented. Pareto optimal output path, imputation schemes, profit sharing arrangements, and time (optimal-trajectory-subgame) consistent solution are derived for a dormant firm cartel in Sect. 7.2. An illustration is shown in the following section. The case when the planning horizon becomes infinite is analyzed in Sect. 7.4, including an illustration with an explicit solution following in the subsequent section.

Original language | English |
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Title of host publication | Static and Dynamic Game Theory |

Subtitle of host publication | Foundations and Applications |

Publisher | Birkhäuser Verlag AG |

Pages | 177-202 |

Number of pages | 26 |

Edition | 9780817682613 |

DOIs | |

Publication status | Published - 1 Jan 2012 |

### Publication series

Name | Static and Dynamic Game Theory: Foundations and Applications |
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Number | 9780817682613 |

ISSN (Print) | 2363-8516 |

ISSN (Electronic) | 2363-8524 |

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### Scopus subject areas

- Statistics, Probability and Uncertainty
- Statistics and Probability
- Applied Mathematics

### Cite this

*Static and Dynamic Game Theory: Foundations and Applications*(9780817682613 ed., pp. 177-202). (Static and Dynamic Game Theory: Foundations and Applications; No. 9780817682613). Birkhäuser Verlag AG. https://doi.org/10.1007/978-0-8176-8262-0_7