Collusive market sharing with spatial competition
This paper develops a spatial model to analyze the stability of a market sharing agreement between two firms. We find that the stability of the cartel depends on the relative market size of each firm. Collusion is not attractive for firms with a small home market, but the incentive for collusion increases when the firm’s home market is getting larger relative to the home market of the competitor. The highest stability of a cartel and additionally the highest social welfare is found when regions are symmetric. Further we can show that a monetary transfer can stabilize the market sharing agreement.
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Karl-Marx-Str. 67, 14482 Potsdam|
Web page: http://www.uni-potsdam.de/fakultaeten/wiso.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Gross & William L. Holahan, 2003. "Credible Collusion in Spatially Separated Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 299-312, February.
- THISSE, Jacques-François & VIVES, Xavier, .
"On the strategic choice of spatial price policy,"
CORE Discussion Papers RP
793, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kai Andree, 2011.
"Collusion in spatially separated markets with quantity competition,"
104, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
- Kai Andree, 2013. "Collusion in Spatially Separated Markets with Quantity Competition," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 309-318, September.
- Francis Bloch & Paul Belleflamme, 2008.
"Sustainable collusion on separate markets,"
- BELLEFLAMME, Paul & BLOCH, Francis, . "Sustainable collusion on separate markets," CORE Discussion Papers RP 2070, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BELLEFLAMME, Paul & BLOCH, Francis, 2006. "Sustainable collusion on separate markets," CORE Discussion Papers 2006059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Tharakan, Joe & Thisse, Jacques-Francois, 2002.
"The importance of being small. Or when countries are areas and not points,"
Regional Science and Urban Economics,
Elsevier, vol. 32(3), pages 381-408, May.
- Tharakan, Joe & Thisse, Jacques-François, 2001. "The Importance of Being Small. Or When Countries are Areas and not Points," CEPR Discussion Papers 2938, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:pot:vwldis:105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marco Winkler)
If references are entirely missing, you can add them using this form.