Tuesday, May 28, 2019

Cartel Stability under Quality Differentiation

By: Iwan BosMarco 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


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