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Collusion in Differentiated Duopolies with Quadratic Costs

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  • David R. Collie

Abstract

The analysis of collusion in infinitely repeated duopoly games has generally assumed that marginal cost is constant, but this note uses quadratic costs (linear marginal costs) to compare the sustainability of collusion under Bertrand and Cournot duopoly with differentiated products. It is shown that when marginal costs are sufficiently increasing in output, then it is always easier to sustain collusion under Cournot duopoly than under Bertrand duopoly for any degree of product substitutability.

Suggested Citation

  • David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
    • Handle: RePEc:bla:buecrs:v:58:y:2006:i:2:p:151-159
    DOI: 10.1111/j.0307-3378.2006.00235.x
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    References listed on IDEAS

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    Cited by:

    1. Kaz Miyagiwa, 2009. "Collusion And Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 768-784, December.
    2. Bin Ying & Leonard F. S. Wang & Qidi Zhang, 2023. "Upstream collusion and corporate social responsibility in downstream competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1020-1028, March.
    3. Sugata Marjit & Suryaprakash Misra & Dyuti S Banerjee, 2017. "Technology improvement and market structure alteration," Economics Bulletin, AccessEcon, vol. 37(2), pages 1106-1112.
    4. Baranes, Edmond & Poudou, Jean-Christophe, 2010. "Cost-based access regulation and collusion in a differentiated duopoly," Economics Letters, Elsevier, vol. 106(3), pages 172-176, March.
    5. Kangsik Choi & DongJoon Lee, 2022. "Note on collusion with network externalities in price versus quantity competition," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 461-471, December.
    6. Jen-Yao Lee & Chen-Chia Fan & Chien-Shu Tsai, 2023. "Network Externalities and Downstream Collusion under Asymmetric Costs: A Note," Games, MDPI, vol. 14(2), pages 1-11, March.

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