We make the observation that cartels which produce goods with lower durability are easier to sustain implicitly. This observation generates the following results: 1) implicit cartels have an incentive to produce goods with an inefficiently low level of durability; 2) a monopoly or explicit cartel is welfare superior to an implicit cartel; 3) welfare is non--monotonic in the number of firms; 4) a regulator may demand inefficiently high levels of durability to prevent collusion.
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Paper provided by Departmental Working Papers in its series Papers with number
032.
Length: Date of creation: 01 Jun 2007 Date of revision: Handle: RePEc:bef:lsbest:032
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Paper
Dan Sasaki & Roland Strausz, 2008.
"Collusion and Durability,"
Discussion Papers
246, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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