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Collusive market sharing with spatial competition

Kai Andree () and Mike Schwan ()

No 105, Volkswirtschaftliche Diskussionsbeiträge from Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät

Abstract: This paper develops a spatial model to analyze the stability of a market sharing agreement between two firms. We find that the stability of the cartel depends on the relative market size of each firm. Collusion is not attractive for firms with a small home market, but the incentive for collusion increases when the firm’s home market is getting larger relative to the home market of the competitor. The highest stability of a cartel and additionally the highest social welfare is found when regions are symmetric. Further we can show that a monetary transfer can stabilize the market sharing agreement.

New Economics Papers: this item is included in nep-bec, nep-com, nep-geo, nep-ind and nep-mic
Date: 2012-10
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http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-62146 (application/pdf)

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Journal Article: Collusive Market Sharing with Spatial Competition (2012) Downloads
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