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Collusion in Differentiated Duopolies with Quadratic Costs

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  • David R. Collie

Abstract

The analysis of collusion in infinitely repeated duopoly games has generally assumed that marginal cost is constant, but this note uses quadratic costs (linear marginal costs) to compare the sustainability of collusion under Bertrand and Cournot duopoly with differentiated products. It is shown that when marginal costs are sufficiently increasing in output, then it is always easier to sustain collusion under Cournot duopoly than under Bertrand duopoly for any degree of product substitutability.

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  • David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
    • Handle: RePEc:bla:buecrs:v:58:y:2006:i:2:p:151-159
    DOI: 10.1111/j.0307-3378.2006.00235.x
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    References listed on IDEAS

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    3. Kangsik Choi & DongJoon Lee, 2022. "Note on collusion with network externalities in price versus quantity competition," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(4), pages 461-471, December.
    4. Kaz Miyagiwa, 2009. "Collusion And Research Joint Ventures," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 768-784, December.
    5. Bin Ying & Leonard F. S. Wang & Qidi Zhang, 2023. "Upstream collusion and corporate social responsibility in downstream competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1020-1028, March.
    6. Lenhard, Severin, 2024. "Cartel Stability in Times of Low Interest Rates," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302361, Verein für Socialpolitik / German Economic Association.
    7. Jen-Yao Lee & Chen-Chia Fan & Chien-Shu Tsai, 2023. "Network Externalities and Downstream Collusion under Asymmetric Costs: A Note," Games, MDPI, vol. 14(2), pages 1-11, March.
    8. Baranes, Edmond & Poudou, Jean-Christophe, 2010. "Cost-based access regulation and collusion in a differentiated duopoly," Economics Letters, Elsevier, vol. 106(3), pages 172-176, March.
    9. Suryaprakash Mishra, 2024. "Entry, market structures and welfare," Journal of Economics, Springer, vol. 142(3), pages 267-276, August.

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