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On the profitability of collusion in location games

  • Huck, Steffen
  • Knoblauch, Vicki
  • Muller, Wieland

In this note we take a first step towards the analysis of collusion in markets with spatial competition, focusing on the case of pure location choices. We find that collusion can only be profitable if a coalition contains more than half of all players. This result holds for location games played in k-dimensional Euclidean space as long as consumers are distributed via atomless density functions. For competition on the unit interval, unit circle, and unit square we also derive sufficient conditions for collusion to be profitable.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 54 (2003)
Issue (Month): 3 (November)
Pages: 499-510

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Handle: RePEc:eee:juecon:v:54:y:2003:i:3:p:499-510
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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