Multi-market Collusion with Territorial Allocation
Aditya Bhattacharjea () and
Uday Sinha ()
No 217, Working papers from Centre for Development Economics, Delhi School of Economics
This paper develops a supergame model of collusion between price-setting oligopolists located in different markets separated by trade costs. The firms produce a homogenous good and sustain collusion based on territorial allocation of markets. We first show, in a more general framework than some earlier literature, that a reduction in trade costs can paradoxically increase the sustainability of collusion. Then we prove a new paradox where the scope for collusion may be enhanced by an increase in the number of firms. We discuss several implications for trade and antitrust policy in this context.
Keywords: Multimarket contact; collusion; trade costs; territorial allocation; cartels (search for similar items in EconPapers)
Pages: 41 pages
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Journal Article: Multi-market collusion with territorial allocation (2015)
Working Paper: MULTI-MARKET COLLUSION WITH TERRITORIAL ALLOCATION (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cde:cdewps:217
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