Aitor Ciarreta Antuñano, Carlos Gutiérrez Hita
The paper has two major contributions to the theory of repeated games. First, we build a supergame oligopoly model where .rms compete in supply functions, we show how collusion sustainability is a¿ected by the presence of a convex cost function, the magnitude of both the slope of demand market, and the number of rivals. Then, we compare the results with those of the traditional Cournot reversion under the same structural characteristics. We .nd how depending on the number of .rms and the slope of the linear demand, collusion sustainability is easier under supply function than under Cournot competition. The conclusions of the models are simulated with data from the Spanish wholesale electricity market to predict lower bounds of the discount factors.
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