Abstract
In a multi-period game, industry excess capacity may act to deter firms from cheating on a non-cooperative oligopoly price. A model is developed that translates the deterrrent influence of excess capacity into predictions about the relationship between excess capacity and oligopoly price-cost margins. The model is tested with time-series data from the U.S. aluminum industry. Results are consistent with those predicted by the model.
Original language | English (US) |
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Pages (from-to) | 231-241 |
Number of pages | 11 |
Journal | International Journal of Industrial Organization |
Volume | 7 |
Issue number | 2 |
DOIs | |
State | Published - Jun 1989 |
ASJC Scopus subject areas
- Industrial relations
- Aerospace Engineering
- Economics and Econometrics
- Economics, Econometrics and Finance (miscellaneous)
- Strategy and Management
- Industrial and Manufacturing Engineering