A Study On Collusion In Oligopoly Market

The study on collusion behavior is an important content of the new industrial organization theory. Compared with the traditional industrial organization, the study on the collusive behavior in the new industrial organization theory is deepening, and with the method of game theory, it is more consistent with the economic realities.However, the results of past literatures are very sensitive to the assumption selected, so that general and robust conclusions or opinions did not appear. The debates in academia result in the attitudes towards cartels, mergers, and collusion have undergone many changes.As the effect factors are complex, this article aims to analyze the characters of collusion and its welfare affect in oligopoly market under a special scope of market power, so as to create special to general models of collusion in oligopoly market. Then using the models to analyze an actual case as to propound some suggestion in competition policy of China is to testify our conclusions.The study of this article is based on the new industrial organization theory, the game theory and welfare economics.Using the methods of game theory, we create a single-period static symmetry market power game model in oligopoly market and a multi-period dynamic asymmetry market power game model in oligopoly market, so as to deduct and infer the characters of collusion and its welfare affect under different market power, and then we apply the conclusions of our models to analyze an actual case.This article's concrete researches are including:first, we reviewed the collusion theory in western industrial organization then we comment on the theory, so as to summarize theory we used and draw our research direction;then, we created a single-period static game model under the condition of symmetry market power, and analyzed the collusion and welfare affect in the duopoly market and the triopoly market, and we compared the effect of the two different markets; third, we created a multi-period dynamic game model under the condition of asymmetry market power, and discussed the relationship between market power and collusion, and discussed its welfare affect; then we used the results of the above to analyze the change of market power's effect on the market efficiency and welfare; finally, we concluded the article and expressed our policy proposal and research prospect.Our core viewpoint is that the collusion in oligopoly market is a market behavior that firms compete with market power, take a cooperative game or non-cooperative game, so as to expect enlarge its producer surplus and aggrieve consumer surplus.The main results of this article are as following:(1)compared with the duopoly market, the triopoly market enhances the welfare while its efficiency is lower, and the defection of participant in collusion agreement will enhance the consumer surplus;(2) under the condition of asymmetry market power, asymmetric capacities makes collusion more difficult to sustain when the aggregate capacity is limited, however asymmetry may instead help collusion when the aggregate capacity is much larger than the market size; (3)the sustainability of collusion only depends on the aggregate relevant capacity,not on its distribution; (4) under the condition of asymmetry market power, the more symmetry the market,the lower the social welfare when the firms'number fixed; (5) the case of Coca-Cola and Huiyuan suggests that not all mergers between large firms are harm to the competition of market, the merger policy should not only focus on the summation of the market share.