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Spatially asymmetric firms and the sustainability of a price agreement


  • Stefano Colombo

    () (Catholic University of Milan)


We study collusion between price discriminating firms which are asymmetrically located in a linear city. We obtain that higher distance increases the sustainability of the collusive agreement for any degree of spatial asymmetry, and more spatial symmetry between firms increases collusion sustainability whatever is the location of the firms in the space, both assuming grim-trigger and optimal punishment.

Suggested Citation

  • Stefano Colombo, 2011. "Spatially asymmetric firms and the sustainability of a price agreement," Economics Bulletin, AccessEcon, vol. 31(3), pages 2414-2421.
  • Handle: RePEc:ebl:ecbull:eb-11-00285

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    References listed on IDEAS

    1. Lederer, Phillip J & Hurter, Arthur P, Jr, 1986. "Competition of Firms: Discriminatory Pricing and Location," Econometrica, Econometric Society, vol. 54(3), pages 623-640, May.
    2. Ross, Thomas W., 1992. "Cartel stability and product differentiation," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 1-13, March.
    3. Colombo, Stefano, 2010. "Product differentiation, price discrimination and collusion," Research in Economics, Elsevier, vol. 64(1), pages 18-27, March.
    4. Chang, Myong-Hun, 1991. "The effects of product differentiation on collusive pricing," International Journal of Industrial Organization, Elsevier, vol. 9(3), pages 453-469, September.
    5. Chang, Myong-Hun, 1992. "Intertemporal Product Choice and Its Effects on Collusive Firm Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 773-793, November.
    6. Maria Paz Espinosa, 1992. "Delivered Pricing, FOB Pricing, and Collusion in Spatial Markets," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 64-85, Spring.
    7. Stefano Colombo, 2012. "Collusion in two models of spatial competition with quantity-setting firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 45-69, February.
    8. Hackner, Jonas, 1995. "Endogenous product design in an infinitely repeated game," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 277-299.
    9. Liu, Qihong & Serfes, Konstantinos, 2007. "Market segmentation and collusive behavior," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 355-378, April.
    10. Hackner, Jonas, 1994. "Collusive pricing in markets for vertically differentiated products," International Journal of Industrial Organization, Elsevier, vol. 12(2), pages 155-177, June.
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    More about this item


    Collusion; Spatial asymmetry.;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design


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