Cartel stability under quality differentiation

Iwan Bos; Marco A. Marini

doi:10.1016/j.econlet.2018.10.024

Cartel stability under quality differentiation

Iwan Bos^*
, Marco A. Marini

^*Corresponding author for this work

Organisation,Strategy & Entrepreneurship

Research output: Contribution to journal › Article › Academic › peer-review

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. (C) 2018 Elsevier B.V. All rights reserved.

Original language	English
Article number	174
Pages (from-to)	70-73
Number of pages	4
Journal	Economics Letters
Volume	174
DOIs	https://doi.org/10.1016/j.econlet.2018.10.024
Publication status	Published - Jan 2019

Keywords

Cartel stability
Collusion
Vertical differentiation
PRICE-COMPETITION

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10.1016/j.econlet.2018.10.024

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@article{60977938840846f5963388a58cb23736,

title = "Cartel stability under quality differentiation",

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. (C) 2018 Elsevier B.V. All rights reserved.",

keywords = "Cartel stability, Collusion, Vertical differentiation, PRICE-COMPETITION",

author = "Iwan Bos and Marini, \{Marco A.\}",

note = "data source: Own data",

year = "2019",

month = jan,

doi = "10.1016/j.econlet.2018.10.024",

language = "English",

volume = "174",

pages = "70--73",

journal = "Economics Letters",

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AU - Marini, Marco A.

N1 - data source: Own data

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AB - 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. (C) 2018 Elsevier B.V. All rights reserved.

KW - Cartel stability

KW - Collusion

KW - Vertical differentiation

KW - PRICE-COMPETITION

U2 - 10.1016/j.econlet.2018.10.024

DO - 10.1016/j.econlet.2018.10.024

M3 - Article

SN - 0165-1765

VL - 174

SP - 70

EP - 73

JO - Economics Letters

JF - Economics Letters

M1 - 174

ER -

Cartel stability under quality differentiation

Abstract

Keywords

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