We use a differentiated duopoly a la Hotelling to assess the impact of firms symmetry on the sustainability of a tacit collusive agreement. We obtain that the smaller firm has the greater incentive to deviate and that symmetry helps collusion for any possible differentiation degree.
Colombo, S., Firms' symmetry and sustainability of collusion in a Hotelling duopoly, <<ECONOMICS BULLETIN>>, 2009; 29 (Marzo): 338-346 [http://hdl.handle.net/10807/4908]
Firms' symmetry and sustainability of collusion in a Hotelling duopoly
Colombo, Stefano
2009
Abstract
We use a differentiated duopoly a la Hotelling to assess the impact of firms symmetry on the sustainability of a tacit collusive agreement. We obtain that the smaller firm has the greater incentive to deviate and that symmetry helps collusion for any possible differentiation degree.
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