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Heterogeneous firms can always collude on a minimum price

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  • Harrington, Joseph E.

Abstract

When firms are heterogeneous, there may not exist a common collusive price that raises all firms’ profits. However it is shown that there always exists a common minimum price that raises all firms’ profits.

Suggested Citation

  • Harrington, Joseph E., 2016. "Heterogeneous firms can always collude on a minimum price," Economics Letters, Elsevier, vol. 138(C), pages 46-49.
    • Handle: RePEc:eee:ecolet:v:138:y:2016:i:c:p:46-49
    DOI: 10.1016/j.econlet.2015.11.020
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    References listed on IDEAS

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    1. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
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    Cited by:

    1. Jorge Alé‐Chilet & Juan Pablo Atal, 2020. "Trade associations and collusion among many agents: evidence from physicians," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1197-1221, December.

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    More about this item

    Keywords

    Collusion; Firm heterogeneity; Minimum recommended price; Trade associations;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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