Market sharing agreements and collusive networks

Paul Belleflamme and Francis Bloch

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Abstract: We analyze reciprocal market sharing agreements by which firms commit not to enter each other's territory in oligopolistic markets and procurement auctions. The set of market sharing agreements defines a collusive network. We characterize stable collusive networks when firms and markets are symmetric. Stable networks are formed of complete alliances, of different sizes, larger than a minimal threshold. Typically, stable networks display fewer agreements than the optimal network for the industry and more agreements than the socially optimal network. When firms or markets are asymmetric, stable networks may involve incomplete alliances and be underconnected with respect to the social optimum. Copyright 2004 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2004-05
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Citations: View citations in EconPapers (81)

Published in International Economic Review, 2004, 45 (2), pp.387-411. ⟨10.1111/j.1468-2354.2004.00130.x⟩

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Journal Article: Market sharing agreements and collusive networks (2004)
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Working Paper: Market Sharing Agreements and Collusive Networks (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01505789

DOI: 10.1111/j.1468-2354.2004.00130.x

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