Stability of multiple cartels in differentiated markets

Abhimanyu Khan and Ronald Peeters

MPRA Paper from University Library of Munich, Germany

Abstract: We characterize stable market structures under price-competition in differentiated markets when multiple cartels may form. Market structures without cartelisation are never stable and always involve multiple small cartels, and, but for one knife-edge case, only involves multiple small cartels. Combined with the result that the unique stable market structure under quantity-competition is also characterised by multiple small cartels, this underscores the importance of considering the possibility of multiple cartels in competition policy. Comparing stable market structures under price and quantity competition, we find that prices and profits are higher under price-competition whenever the market is sufficiently differentiated or sufficiently concentrated.

Keywords: multiple cartels; stable cartels; price competition; differentiated markets (search for similar items in EconPapers)
JEL-codes: C70 D43 L13 (search for similar items in EconPapers)
Date: 2025-07-03
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125199

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