Price vs Quantity in a Repeated Differentiated Duopoly

Luca Lambertini () and Christian Schultz ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate the choice of market variable, price or quantity, of an optimal implicit cartel. If the discount factor is high, the cartel can realize the monopoly profit in both cases. Otherwise, it is optimal for the cartel to rely on quantities in the collusive phase if goods are substitutes and prices if goods are complements. The reason is that this minimizes the gains from deviations from collusive play.

Date: 2000
New Economics Papers: this item is included in nep-ind and nep-mic
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:379

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