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Credible Collusion in Spatially Separated Markets

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  • John Gross

    (Econweb and Duke University)

  • William L. Holahan

    (University of Wisconsin-Milwaukee and University of Birmingham)

Abstract

In an infinitely repeated game, sellers employ a trigger strategy of mutual forbearance from invasion of each other's markets, stabilized against invasion by the threat of Bertrand pricing. Contrary to conventional static models, this article shows stability for a wide range of transportation costs and present value parameters, and that increases in transportation costs tend to destabilize the collusive agreement. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 44 (2003)
Issue (Month): 1 (February)
Pages: 299-312

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Handle: RePEc:ier:iecrev:v:44:y:2003:i:1:p:299-312

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Cited by:
  1. Martin C. Byford & Joshua S. Gans, 2014. "Collusion at the Extensive Margin," NBER Working Papers 20163, National Bureau of Economic Research, Inc.
  2. BELLEFLAMME, Paul & BLOCH, Francis, . "Sustainable collusion on separate markets," CORE Discussion Papers RP -2070, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Kai Andree, 2011. "Collusion in spatially separated markets with quantity competition," Volkswirtschaftliche Diskussionsbeiträge 104, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  4. Stefano Colombo, 2011. "Spatial price discrimination in the unidirectional Hotelling model with elastic demand," Journal of Economics, Springer, vol. 102(2), pages 157-169, March.
  5. Aditya Bhattacharjea & Uday Bhanu Sinha, 2012. "Multi-market Collusion with Territorial Allocation," Working papers 217, Centre for Development Economics, Delhi School of Economics.
  6. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial price discrimination and location choice with labor markets," The Annals of Regional Science, Springer, vol. 52(1), pages 103-119, January.
  7. Kai Andree & Mike Schwan, 2012. "Collusive market sharing with spatial competition," Volkswirtschaftliche Diskussionsbeiträge 105, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
  8. Colombo, Stefano, 2011. "On the rationale of spatial discrimination with quantity-setting firms," Research in Economics, Elsevier, vol. 65(3), pages 254-258, September.
  9. Stefano Colombo, 2012. "Collusion in two models of spatial competition with quantity-setting firms," The Annals of Regional Science, Springer, vol. 48(1), pages 45-69, February.
  10. Yasunori Okumura, 2011. "A dynamic analysis of collusive networks," Review of Economic Design, Springer, vol. 15(4), pages 317-336, December.
  11. Liang, Wen-Jung & Hwang, Hong & Mai, Chao-Cheng, 2006. "Spatial discrimination: Bertrand vs. Cournot with asymmetric demands," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 790-802, November.

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