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Cartels in the unidirectional Hotelling model

Stefano Colombo ()

Economic Modelling, 2013, vol. 31, issue C, 690-696

Abstract: We study the impact of space on perfect collusion sustainability within the unidirectional Hotelling model where the firms are constrained to move to the left. We obtain that when the firm that located to the left of the Hotelling segment has the greater incentive to deviate, the distance between the firms has a negative impact on the capability of the firms to sustain the collusion in equilibrium. On the other hand, when the firm that located to the right has the greater incentive to deviate, greater spatial distance makes the collusion easier to sustain in equilibrium. These results substantially differ from the bidirectional Hotelling model.

Keywords: Unidirectional Hotelling model; Cartels; Bertrand; Cournot (search for similar items in EconPapers)
JEL-codes: D43 L11 L41 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.econmod.2013.01.028

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