Profitable collusion on costs: a spatial model

John Heywood and Zheng Wang ()
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Zheng Wang: Capital University of Economics and Business

Journal of Economics, 2020, vol. 131, issue 3, No 4, 267-286

Abstract: Abstract This paper uniquely demonstrates the scope for profitable collusion on transport costs under delivered pricing. In addition to being profitable, such collusion is shown to be more stable than price collusion and harder to detect as it presents to authorities as continued Bertrand price competition. Such collusion generates endogenous duopoly locations outside the quartiles with less stable but more profitable collusion happening toward the endpoints. These results emerge in both the traditional model of inelastic demand and an extended model of elastic demand.

Keywords: Spatial price discrimination; Collusion; Transport costs (search for similar items in EconPapers)
JEL-codes: L13 L41 R32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:131:y:2020:i:3:d:10.1007_s00712-020-00709-5

DOI: 10.1007/s00712-020-00709-5

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