This note considers cartel stability when the cartelized products are vertically differentiated. If market shares are maintained at pre-collusive levels, then the firm with the lowest competitive price-cost margin has the strongest incentive to deviate from the collusive agreement. The lowest-quality supplier has the tightest incentive constraint when the difference in unit production costs is sufficiently small.
Cartel stability under quality differentiation / Bos, Iwan; Marini, M.. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - 174:1(2018), pp. 1-4. [https://doi.org/10.1016/j.econlet.2018.10.024]
Cartel stability under quality differentiation
Marini, M.Co-primo
Investigation
2018
Abstract
This note considers cartel stability when the cartelized products are vertically differentiated. If market shares are maintained at pre-collusive levels, then the firm with the lowest competitive price-cost margin has the strongest incentive to deviate from the collusive agreement. The lowest-quality supplier has the tightest incentive constraint when the difference in unit production costs is sufficiently small.File allegati a questo prodotto
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