Price or Quantity in Tacit Collusion?

Luca Lambertini () and Christian Schultz ()

No 2001-05, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: We investigate the choice of market variable, price or quantity, of an optimal implicit cartel. If the discount factor is high, the cartel can realize the monopoly profit in both cases. Otherwise, it is optimal for the cartel to rely on quantities in the collusive phase if goods are substitutes and prices if goods are complements. The reason is that this minimizes the gains from deviations from collusive play.

Keywords: Partial collusion; product differentiation (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2001-10
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Journal Article: Price or quantity in tacit collusion? (2003)
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