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Multi-market Collusion with Territorial Allocation

Aditya Bhattacharjea () and Uday Sinha ()

No 217, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: 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
Date: 2012-10
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Related works:
Journal Article: Multi-market collusion with territorial allocation (2015) Downloads
Working Paper: MULTI-MARKET COLLUSION WITH TERRITORIAL ALLOCATION (2012) Downloads
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