Cartel stability under quality differentiation

Iwan Bos and Marco Marini

Economics Letters, 2019, vol. 174, issue C, 70-73

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 (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Cartel Stability under Quality Differentiation (2018)
Working Paper: Cartel Stability under Quality Differentiation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:174:y:2019:i:c:p:70-73

DOI: 10.1016/j.econlet.2018.10.024

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