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Price Caps as Welfare-Enhancing Coopetition

Patrick Rey () and Jean Tirole

No 13-439, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: The paper makes two related contributions. First, and in contrast with the rich body of literature on collusion with (mainly perfect) substitutes, it derives general results on the sustainability of tacit coordination for a class of nested demand functions that allows for the full range between perfect substitutes and perfect complements. Second, it studies the desirability of joint marketing alliances, an alternative to mergers. It shows that a combination of two informationfree regulatory requirements, mandated unbundling by the joint marketing entity and unfettered independent marketing by the firms, makes joint-marketing alliances always socially desirable, whether tacit coordination is feasible or not.

Keywords: tacit collusion; cooperation; substitutes and complements; essentiality; joint marketing agreements; patent pools; independent licensing; unbundling; co-opetition (search for similar items in EconPapers)
JEL-codes: D43 L24 L41 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-law, nep-mic, nep-mkt and nep-tid
Date: 2013-10-23, Revised 2018-01
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Published in Journal of Political Economy, 2018.

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