Tuesday, May 28, 2019
Cartel Stability under Quality Differentiation
| By: | Iwan Bos; Marco Marini |
| Abstract: | This note considers cartel stability when the cartelized products are vertically differentiated. If market shares are maintained at pre-collusive levels, then the firm with the lowest competitive price-cost margin has the strongest incentive to deviate from the collusive agreement. The lowest-quality supplier has the tightest incentive constraint when the difference in unit production costs is sufficiently small. |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1812.10293&r=com |
https://lawprofessors.typepad.com/antitrustprof_blog/2019/05/cartel-stability-under-quality-differentiation.html
