Cartel Stability under Quality Differentiation

Iwan Bos and Marco Marini

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Cartel Stability; Collusion; Vertical Differentiation; Price Collusion. (search for similar items in EconPapers)
JEL-codes: D2 D4 D43 L1 L4 (search for similar items in EconPapers)
Date: 2018-07-31
New Economics Papers: this item is included in nep-com, nep-gth and nep-ind
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Related works:
Journal Article: Cartel stability under quality differentiation (2019)
Working Paper: Cartel Stability under Quality Differentiation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88335

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