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Pricing Policy and Partial Collusion

  • Stefano Colombo

    ()

We study the pricing policy equilibria emerging in a partial collusion duopolistic framework where firms in the first stage of the game choose non-cooperatively whether to price discriminate or not, and from the second stage onward collude on prices.When the discount factor is particularly high or particularly low both firms price discriminate in equilibrium. For intermediate discount factors and high firms'asymmetry, the unique equilibrium is characterized by only the smaller firm choosing price discrimination.In the case of intermediate discount factors and low firms'asymmetry, there are two possible equilibria: both firms price discriminate or no firm price discriminates.

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File URL: http://hdl.handle.net/10.1007/s10842-010-0087-9
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Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 11 (2011)
Issue (Month): 4 (December)
Pages: 325-349

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Handle: RePEc:kap:jincot:v:11:y:2011:i:4:p:325-349
Contact details of provider: Web page: http://springerlink.metapress.com/link.asp?id=105724

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  1. Yuncheol Jeong & Masayoshi Maruyama, 2009. "Commitment to a strategy of uniform pricing in a two-period duopoly with switching costs," Journal of Economics, Springer, vol. 98(1), pages 45-66, September.
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  3. Stefano Colombo, 2009. "Product differentiation, price discrimination and collusion," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0085, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
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  13. Aguirre, Inaki & Espinosa, Maria Paz & Macho-Stadler, Ines, 1998. "Strategic entry deterrence through spatial price discrimination," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 297-314, May.
  14. 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.
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  17. Hackner, Jonas, 1996. "Optimal symmetric punishments in a Bertrand differentiated products duopoly," International Journal of Industrial Organization, Elsevier, vol. 14(5), pages 611-630, July.
  18. 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.
  19. Abreu, Dilip, 1986. "Extremal equilibria of oligopolistic supergames," Journal of Economic Theory, Elsevier, vol. 39(1), pages 191-225, June.
  20. Stefano Colombo, 2011. "Discriminatory prices and the prisoner dilemma problem," The Annals of Regional Science, Springer, vol. 46(2), pages 397-416, April.
  21. Armstrong, Mark, 2006. "Price discrimination," MPRA Paper 4693, University Library of Munich, Germany.
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  26. Stefano Colombo, 2009. "Firms' symmetry and sustainability of collusion in a Hotelling duopoly," Economics Bulletin, AccessEcon, vol. 29(1), pages 338-346.
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