Collusion and welfare in the case of a horizontally differentiated duopoly with network compatibility

Tsuyoshi Toshimitsu

No 163, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Based on a horizontally differentiated duopoly model with network externalities, in which we focus on the role of compatibility between the products, we consider the effect of collusion on social welfare. We demonstrate that collusion improves social welfare, compared to the case of noncooperative Cournot competition, if the level of compatibility between the products under collusion is sufficiently large, given that a network externality is strong. In this case, the collusion is sustainable.

Keywords: collusion; network externality; compatibility; horizontally differentiated duopoly; welfare (search for similar items in EconPapers)
JEL-codes: D43 D62 L13 L14 L15 L41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017-06, Revised 2017-06
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:163

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