Tacit Agreement Betekenis

In general, if payments for collusion (normal, normal) are more important than payments for fraud (aggressive, aggressive), then both companies will (tacitly) want to agree. Although this collusive layout is not a balance in the one-shot game above, the repetition of the game allows companies to maintain agreements over long periods of time. This can be achieved, for example, if each company`s strategy is to do normal advertising as long as its rival does, and to pursue aggressive advertising forever as soon as its rival has launched an aggressive advertising campaign at least once (see: fierce trigger) (this threat is credible, because the symmetrical use of aggressive advertising is a nash balance of every step of the game). Each company must then weigh the short-term profit of $30 of “fraud” against the long-term loss of $35 in all future periods, which is part of its penalty. Assuming that companies take sufficient care of the future, collusion is a balance of this repetitive game. Unspoken agreements occur when companies choose measures that may minimize another company`s response. B, for example, avoid the possibility of reducing the possibility, as this would encourage the opposition to take retaliatory measures. In other words, two companies agree to play a certain strategy without explicitly saying so. Oligopolists generally try not to participate in lower prices, excessive advertising or other forms of competition. Thus, there may be unwritten rules of collusive behavior, such as price leadership (tacit agreement). There will then be a price leader who will set the overall price of the industry, while other companies will follow suit. Look at the case of British Salt Limited and New Cheshire Salt Works Limited.B[1] An oligopoly where each company is independent tends to strike a balance in the ideal way, but in disguised cooperation such that price management tends to increase profitability for all, although it is an unstable agreement.

Companies therefore prefer not to cheat (so collusion is a balance), so more precisely, we assume that companies have a discount factor δ .displaystyle .delta . The expected value of the cost of fraud and punished indefinitely conventional economic theory is that the efficiency of Pareto is achieved at a price corresponding to the incremental cost of producing additional units.