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Collusion in spatially separated markets with quantity competition

Author

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  • Kai Andree

Abstract

This paper develops the incentives to collude in a model with spatially separated markets and quantity setting firms. We find that increases in transportation costs stabilize the collusive agreement. We also show that, the higher the demand in both markets the less likely will collusion be sustained. Gross and Holahan (2003) use a similar model with price setting firms, we compare their results with ours to analyze the impact of the mode of competition on sustainability of collusion. Further we analyze the impact of collusion on social welfare and find that collusion may be welfare enhancing.

Suggested Citation

  • Kai Andree, 2011. "Collusion in spatially separated markets with quantity competition," Volkswirtschaftliche Diskussionsbeiträge 104, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    • Handle: RePEc:pot:vwldis:104
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    File URL: http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-55927
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    Cited by:

    1. Hamed Jafari & Seyed Reza Hejazi & Morteza Rasti-Barzoki, 2016. "Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach," Journal of Industry, Competition and Trade, Springer, vol. 16(3), pages 323-343, September.
    2. Armando Garcia Pires, 2014. "Beyond Trade Costs: Firms’ Endogenous Access to International Markets," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 229-257, June.
    3. Wen-Chung Guo & Fu-Chuan Lai, 2013. "The role of an intermediate market within the barbell model," Letters in Spatial and Resource Sciences, Springer, vol. 6(3), pages 151-161, November.
    4. Kai Andree & Mike Schwan, 2012. "Collusive Market Sharing with Spatial Competition," Economics Bulletin, AccessEcon, vol. 32(4), pages 3357-3364.
    5. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial price discrimination and location choice with labor markets," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 103-119, January.
    6. Stefano Colombo, 2016. "A Model of Three Cities," International Regional Science Review, , vol. 39(4), pages 386-416, October.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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