Imperfect Competition and Committment

The degree of competition that a rm faces affects its ability to commit to goodbehavior. However, the relationship need not be monotonic since competition affectsthe pro ts when committed to good behavior (such as efficient high quality) and badbehavior as well as the short-term profits from "cheating". We demonstrate that asa result competition (using two different measures of competition which show qualitatively similar effects) might have non-monotonic effects on a rm s ability to commit. In particular, a firm might choose to operate in a more competitive environment