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Collusion in Differentiated Duopolies with Quadratic Costs

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  • David R. Collie

Abstract

The analysis of collusion in infinitely repeated duopoly games has generally assumed that marginal cost is constant, but this note uses quadratic costs (linear marginal costs) to compare the sustainability of collusion under Bertrand and Cournot duopoly with differentiated products. It is shown that when marginal costs are sufficiently increasing in output, then it is always easier to sustain collusion under Cournot duopoly than under Bertrand duopoly for any degree of product substitutability.

Suggested Citation

  • David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
  • Handle: RePEc:bla:buecrs:v:58:y:2006:i:2:p:151-159
    DOI: 10.1111/j.0307-3378.2006.00235.x
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    File URL: https://doi.org/10.1111/j.0307-3378.2006.00235.x
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    Cited by:

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    3. Kaz Miyagiwa, 2009. "Collusion And Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 768-784, December.

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