Collusive Market Sharing with Spatial Competition
AbstractThis paper develops a spatial model to analyze the stability of a market sharing agreement between two firms. We find that the stability of the cartel depends on the relative market size of each firm. Collusion is not attractive for firms with a small home market, but the incentive for collusion increases when the firm's home market is getting larger relative to the home market of the competitor. The highest stability of a cartel and additionally the highest social welfare is found when regions are symmetric.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 4 ()
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Spatial Competition; Market Sharing; Collusion;
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- John Gross & William L. Holahan, 2003. "Credible Collusion in Spatially Separated Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 299-312, February.
- repec:ner:louvai:info:hdl:2078.1/53411 is not listed on IDEAS
- Kai Andree, 2011. "Collusion in spatially separated markets with quantity competition," Volkswirtschaftliche DiskussionsbeitrÃ¤ge 104, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
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