Vertical differentiation and collusion: Pruning or proliferation?
Jean Gabszewicz (),
Marco Marini () and
Research in Economics, 2017, vol. 71, issue 1, 129-139
In this paper, we tackle the dilemma of pruning versus proliferation in a vertically differentiated oligopoly under the assumption that some firms collude and control both the range of variants for sale and their corresponding prices, likewise a multiproduct firm. We analyse whether pruning emerges and, if so, a fighting brand is marketed. We find that it is always more profitable for colluding firms to adopt a pricing strategy such that some variants are withdrawn from the market. Under pruning, these firms commercialize a fighting brand only when facing competitors in a low-end market.
Keywords: Vertically differentiated markets; Cannibalization; Market pruning; Price collusion (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Vertical differentiation and collusion: pruning or proliferation? (2017)
Working Paper: Vertical differentiation and collusion: pruning or proliferation? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:71:y:2017:i:1:p:129-139
Access Statistics for this article
Research in Economics is currently edited by Federico Etro
More articles in Research in Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().