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Cartel sustainability with vertical product differentiation: Price versus quantity competition

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  • Andaluz, Joaquín

Abstract

In the context of a vertically differentiated duopoly, we analyse the influence of the degree of differentiation on cartel sustainability, under both price and quantity competition. We find that, under both Bertrand and Cournot competition, the effect of vertical product differentiation on sustainability of the collusive equilibrium is unclear. It is shown that, given a degree of differentiation, price collusion is more sustainable than quantity collusion.

Suggested Citation

  • Andaluz, Joaquín, 2010. "Cartel sustainability with vertical product differentiation: Price versus quantity competition," Research in Economics, Elsevier, vol. 64(4), pages 201-211, December.
    • Handle: RePEc:eee:reecon:v:64:y:2010:i:4:p:201-211
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    References listed on IDEAS

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    Cited by:

    1. Nguyen, Xuan, 2015. "On the efficiency of private and state-owned enterprises in mixed markets," Economic Modelling, Elsevier, vol. 50(C), pages 130-137.
    2. Stefano Colombo, 2012. "Colluding on a Price Increase," Journal of Industry, Competition and Trade, Springer, vol. 12(4), pages 365-371, December.
    3. Miao, Zhuang, 2019. "Income Distribution, Vertical Differentiation, and the Quantity Competition," MPRA Paper 95104, University Library of Munich, Germany.
    4. Colombo, Stefano, 2013. "Cartels in the unidirectional Hotelling model," Economic Modelling, Elsevier, vol. 31(C), pages 690-696.
    5. Xuan Nguyen & Chi†Chur Chao & Pasquale Sgro & Munirul Nabin, 2017. "Cross†border Travellers and Parallel Trade: Implications for Asian Economies," The World Economy, Wiley Blackwell, vol. 40(8), pages 1531-1546, August.
    6. 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.

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