MULTI-MARKET COLLUSION WITH TERRITORIAL ALLOCATION
Published By: Centre for Development Economics on eSS | Published Date: October, 01 , 2012This paper develops a super game model of collusion between price-setting oligopolists located in different markets separated by trade costs. The firms produce a homogenous good and sustain collusion based on territorial allocation of markets. We first show, in a more general framework than some earlier literature, that a reduction in trade costs can paradoxically increase the sustainability of collusion. Then we prove a new paradox
where the scope for collusion may be enhanced by an increase in the number of firms. We discuss several implications for trade and antitrust policy in this context.
[Working Paper No. 217]
Author(s): Aditya Bhattacharjea | Posted on: Nov 05, 2012 | Views(565) | Download (519)