Predation strategies make collusion easier to sustain in duopoly competition.
The article explores how predatory actions can impact the sustainability of secret agreements between two companies. When discount factors are moderate, collusion can be maintained by using punishment strategies against defectors. However, when discount factors are low, companies are tempted to break the agreement and compete freely. On the other hand, with high discount factors, it is more profitable to attack a colluding company rather than cooperate. This contradicts previous beliefs that only patient companies can maintain collusion.