On the stability of multimarket collusion in price-setting supergames

Osayi Akinbosoye, Eric Bond and Constantinos Syropoulos ()

International Journal of Industrial Organization, 2012, vol. 30, issue 2, 253-264

Abstract: In this paper we examine how trade liberalization affects collusive stability in the context of multimarket interactions. The model we consider is a segmented-markets duopoly with differentiated goods in which price-setting firms pool their incentive constraints across markets to sustain their most collusive outcome. We find that, when goods are very close substitutes and trade costs are sufficiently high, a marginal reduction in trade costs facilitates collusion. Exactly the opposite is true if, for any given degree of product substitutability, trade costs are sufficiently low. We also study the dependence of multimarket collusion on product differentiation.

Keywords: Multimarket cartels; Trade costs; Product differentiation (search for similar items in EconPapers)
JEL-codes: D43 F10 F12 F13 F15 F42 L12 L13 L41 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:2:p:253-264

DOI: 10.1016/j.ijindorg.2011.11.001

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