Multimarket contact under demand fluctuations

The present paper studies repeated Bertrand oligopoly with multiple markets. The markets are subject to independent, stochastic fluctuations in demands. According to the literature, the demand fluctuations generally hinder collusion, while the multimarket contact sometimes facilitates it. We show that when only partial collusion is sustainable under a single market, the per-market expected profit under the most collusive equilibrium increases with the number of markets. Further, the difference between the total expected profit under full collusion and that under the most collusive equilibrium vanishes, if the number of markets goes to infinity. Thus the collusion-deterrence effects of fluctuated demands completely disappear in the limit.