We study collusion between price discriminating firms which are asymmetrically located in a linear city. We obtain that higher distance increases the sustainability of the collusive agreement for any degree of spatial asymmetry, and more spatial symmetry between firms increases collusion sustainability whatever is the location of the firms in the space, both assuming grim-trigger and optimal punishment.
Colombo, S., Spatially asymmetric firms and the sustainability of a price agreement, <<ECONOMICS BULLETIN>>, 2011; (31): 2414-2421 [http://hdl.handle.net/10807/4985]
Spatially asymmetric firms and the sustainability of a price agreement
Colombo, Stefano
2011
Abstract
We study collusion between price discriminating firms which are asymmetrically located in a linear city. We obtain that higher distance increases the sustainability of the collusive agreement for any degree of spatial asymmetry, and more spatial symmetry between firms increases collusion sustainability whatever is the location of the firms in the space, both assuming grim-trigger and optimal punishment.
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