Collusion, competition and piracy

Francisco Martínez-Sánchez

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we analyze firms' ability to tacitly collude on pricesin an infinitely repeated duopoly game of vertical productdifferentiation. We show that firms collude if and only if their discountfactor is high enough, i.e. if they value future profits sufficiently. We alsoshow that a lower cost of copying facilitates collusion but that a higherquality of the copy hinders collusion. Thus, the overall effect of thesenew characteristics of copies made by consumers is ambiguous.

Keywords: Collusion; competition; piracy; consumers; cost of copying (search for similar items in EconPapers)
JEL-codes: D40 K42 L13 L40 O34 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2009-01
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2009-20

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