Researching On The Effect Mechanism Of Fluctuation Of Demand To Collusion

Haltiwanger and Harrington(1991)assumed that both the level of current demand and firm's expectation on future demand to change over time and then they captured two important properties of the business cycle. There analysis revealed that while the gain to deviating from a collusive agreement is greatest during booms, firms find it most difficult to collude during recessions, as the forgone profits from inducing a price war are relatively low. An implication of this effect for pricing behavior is that at the same level of demand, price is lower when demand is declining than when demand is rising. Our framework also allows the demand to change over time, but assumes in Harrington and Haltiwanger are improved. Their analysis is based on product homogeneous, this assumption in advance to make things simple, but the difference between with reality, some problems existing in explaining when insufficient. Because absolutely homogeneous products not exist, there are differences, the difference of both level, also have a vertical. Meanwhile we define prosperity is consumer disposable income increase, demand is increasing period. This article through to improve product homogeneous hypothesis, Haltiwanger and improved Harrington analysis in an industry, assuming that only two manufacturers, they generate different quality products respectively, and each manufacturer generate only a quality, establish model, it is concluded that the product different conditions, when demand fluctuation of conspiring to prices, profits, etc in conclusion, finally, based on the analysis of the value of the different choices discount factor to validate this conclusion.Our analysis shows that the difference in products, conspiring to is still under the condition of the recession more difficult to maintain. Assume consumer income increases that they tend to buy better quality products, but in income decrease when it was not, so in product different conditions, boom because consumers income increase, the more willing to buy better quality products, therefore, even if the product quality is poorer manufacturer, also not deviate from conspiring to prices may change the consumers' willingness to buy, which can obtain departure from income is small, meanwhile considering departure from the punishment was found, they bring more won't choose deviation, therefore in the conspiracy boom conspiring to very stable. Similarly, in recession, because consumers disposable income decrease, their willingness to buy also gradually reduce, whether high quality products to manufacturers or low quality products manufacturers are forced to cater to lower the price of consumption request motives, so recession conspiring to harder to maintain.