Sustainable collusion on separate markets

Paul Belleflamme and Francis Bloch

No 2006059, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: When firms can supply several separate markets, collusion can take two forms. Either firms establish production quotas on all the markets, or they share markets. This paper compares production quotas and market sharing agreements in a Cournot duopoly where firms incur a fixed cost for serving each market. We show that there exists a threshold value of the fixed cost such that collusion is easier to sustain with production quotas below the threshold and with market sharing agreements above the threshold. These results are obtained both under Nash reversion strategies and the globally optimal punishment strategies introduced by Abreu (1986).

Keywords: implicit collusion; market sharing agreements; production quotas; optimal punishment (search for similar items in EconPapers)
JEL-codes: L11 L12 (search for similar items in EconPapers)
Date: 2006-06
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Related works:
Working Paper: Sustainable collusion on separate markets (2009)
Journal Article: Sustainable collusion on separate markets (2008)
Working Paper: Sustainable collusion on separate markets (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2006059

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