Fabio C. Bagliano
Dipartimento di Scienze Economiche e Finanziarie, Università di Torino

Alberto Dalmazzo
Dipartimento di Economia Politica, Università di Siena

Economics Letters, vol.62, 1999, p.69-74

Abstract

We extend the Rotemberg-Saloner's (1986) "implicit collusion'' framework to the consideration of capital market imperfections, captured by a non-zero probability of liquidation of firms in recessionary periods. We show that the Rotemberg-Saloner result of countercyclical markups is quite robust to the extension and, moreover, liquidation risks may even strengthen the degree of markup countercyclicality.

J.E.L. classification numbers: E30, L13, L16
Keywords: implicit collusion, countercyclical markups, capital market imperfections                     Download WP PDF(185 kb)