Collusion in spatially separated markets with quantity competition
AbstractThis paper develops the incentives to collude in a model with spatially separated markets and quantity setting firms. We find that increases in transportation costs stabilize the collusive agreement. We also show that, the higher the demand in both markets the less likely will collusion be sustained. Gross and Holahan (2003) use a similar model with price setting firms, we compare their results with ours to analyze the impact of the mode of competition on sustainability of collusion. Further we analyze the impact of collusion on social welfare and find that collusion may be welfare enhancing.
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Bibliographic InfoPaper provided by Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät in its series Volkswirtschaftliche Diskussionsbeiträge with number 104.
Date of creation: Nov 2011
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Other versions of this item:
- Kai Andree, 2013. "Collusion in Spatially Separated Markets with Quantity Competition," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 309-318, September.
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-28 (All new papers)
- NEP-BEC-2011-11-28 (Business Economics)
- NEP-COM-2011-11-28 (Industrial Competition)
- NEP-IND-2011-11-28 (Industrial Organization)
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- Kai Andree & Mike Schwan, 2012.
"Collusive Market Sharing with Spatial Competition,"
AccessEcon, vol. 32(4), pages 3357-3364.
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