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Advantageous Semi‐Collusion

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  • Andrew Brod
  • Ram Shivakumar

Abstract

The textbook view that cartels increase industry profits and lower consumer welfare ignores the effects of competition in other activities. A revisionist view shows that when cartel members compete in other activities, i.e. when they semi‐collude, the cartel members may be worse off and consumers better off. Using a two‐stage model in which the non‐production activity is R&D and is subject to technological spillovers, we show that both the traditional and revisionist views can be wrong, that consumers and producers can both be made worse off, or both better off, by a semi‐collusive production cartel.

Suggested Citation

  • Andrew Brod & Ram Shivakumar, 1999. "Advantageous Semi‐Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 47(2), pages 221-230, June.
    • Handle: RePEc:bla:jindec:v:47:y:1999:i:2:p:221-230
    DOI: 10.1111/1467-6451.00098
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    Cited by:

    1. Yonezawa, Koichi & Richards, Timothy J., 2016. "Competitive Package Size Decisions," Journal of Retailing, Elsevier, vol. 92(4), pages 445-469.
    2. Maarten Pieter Schinkel & Leonard Treuren, 2021. "Corporate Social Responsibility by Joint Agreement," Tinbergen Institute Discussion Papers 21-063/VII, Tinbergen Institute.
    3. Ishikawa, Nana & Shibata, Takashi, 2021. "R&D competition and cooperation with asymmetric spillovers in an oligopoly market," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 624-642.
    4. Luciano Fanti & Domenico Buccella, 2021. "Corporate social responsibility in unionised network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(2), pages 235-262, June.
    5. Toshihiro Matsumura & Noriaki Matsushima & Susumu Cato, 2009. "Relative Performance and R&D Competition," ISER Discussion Paper 0752, Institute of Social and Economic Research, Osaka University.
    6. Ghosh, Arghya & Morita, Hodaka, 2012. "Competitor collaboration and product distinctiveness," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 137-152.
    7. Thomas Peeters, 2015. "Profit-Maximizing Gate Revenue Sharing In Sports Leagues," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 1275-1291, April.
    8. Pedro Gonzaga & António Brandão & Helder Vasconcelos, 2014. "Theory of Semi-Collusion in the Labor Market," FEP Working Papers 522, Universidade do Porto, Faculdade de Economia do Porto.
    9. Schinkel, Maarten Pieter & Spiegel, Yossi & Treuren, Leonard, 2022. "Production agreements, sustainability investments, and consumer welfare," Economics Letters, Elsevier, vol. 216(C).

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