Non-Cooperative Duopoly Games under Uncertainty of Discount Rates
Pp. 36-50 (15)
There is a vast literature on non-cooperative oligopoly games. In this
literature, however, the discount rates have been considered as fixed. Consequently, this
chapter aims at understanding the effects of uncertainty over future discount rates on
collusive behavior. Results indicate that the more uncertain the future discount rates are,
the more collusive firms become. A higher average discount rate, on the other hand, is
anti-collusive. With this kind of information at hand, policies that are targeted at reducing
the variability in interest rates can promote competitive behavior by discouraging firms
to behave collusively. Thus, the results can be of use for competition authorities and
Non-cooperative duopoly games, Uncertainty, Discount rates.
Department of Economics, Yildiz Technical University, Istanbul, Turkey.