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Exogenous Product Differentiation and the Stability of Collusion

  • L. Lambertini

The stability of collusion in quantities in a differentiated duopoly is analised, and the result is compared to that emerging in the case of price-setting behaviour. It turns out that quantity collusion is generally better sustained than price collusion, unless products are almost perfect substitutes. Under both quantity and price competition, the social damage associated with collusion is increasing in the degree of substitutability.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number 219.

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Date of creation: Jun 1995
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Handle: RePEc:bol:bodewp:219
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  1. Rothschild, R., 1992. "On the sustainability of collusion in differentiated duopolies," Economics Letters, Elsevier, vol. 40(1), pages 33-37, September.
  2. Hackner, Jonas, 1994. "Collusive pricing in markets for vertically differentiated products," International Journal of Industrial Organization, Elsevier, vol. 12(2), pages 155-177, June.
  3. Deneckere, R., 1983. "Duopoly supergames with product differentiation," Economics Letters, Elsevier, vol. 11(1-2), pages 37-42.
  4. Majerus, David W., 1988. "Price vs. quantity competition in oligopoly supergames," Economics Letters, Elsevier, vol. 27(3), pages 293-297.
  5. Tom Ross, 1990. "Cartel Stability And Product Differentiation," Carleton Industrial Organization Research Unit (CIORU) 90-04, Carleton University, Department of Economics.
  6. 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.
  7. Jehiel, Philippe, 1992. "Product differentiation and price collusion," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 633-641, December.
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