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Note on collusion with network externalities in price versus quantity competition

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  • Kangsik Choi
  • DongJoon Lee

Abstract

We compare collusion stability under Bertrand and Cournot duopoly with differentiated network products. Contrast to previous studies, we show that (i) the range of collusion incentive is narrower under Cournot competition than under Bertrand competition, unless network externalities are sufficiently strong; (ii) collusion in prices (quantities) is more stable than in quantities (prices) if network externalities are strong (weak); and (iii) finally, regardless of the strength of network externalities, collusion under Bertrand competition is more stable for high levels of substitutability than under Cournot competition.

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  • 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.
    • Handle: RePEc:bla:ijethy:v:18:y:2022:i:4:p:461-471
    DOI: 10.1111/ijet.12326
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    References listed on IDEAS

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