How does the minimum punishment level to ensure no cheating

Reference no: EM13238422

Consider a N firm homogenous good oligopoly with constant marginal cost, which is the same for all firms. Assume that the N firms form a collusive agreement to produce monopoly output levels as long as no cheating is observed. If cheating is observed amongst any of the N firms, a T period price war, in which firms revert to the Cournot equilibrium ensues. How does the minimum punishment level to ensure no cheating change with N?

Reference no: EM13238422

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