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Exchange Agreements Facilitate Collusion

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  • Hans‐Theo Normann

Abstract

A duopoly model with quantity competition is analyzed in which firms collude in two markets. There is specialization in production in order to promote efficiency. Firms may then either exclusively market one good each, or they may agree to exchange goods and cross‐supply a part of the production to the other firm. It is shown that, compared to specialization in marketing, positive exchanges of goods relax the incentive constraints that limit the extent of collusion.

Suggested Citation

  • Hans‐Theo Normann, 2001. "Exchange Agreements Facilitate Collusion," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 113-125, May.
    • Handle: RePEc:bla:germec:v:2:y:2001:i:2:p:113-125
    DOI: 10.1111/1468-0475.00030
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    References listed on IDEAS

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    Cited by:

    1. Normann, Hans-Theo & Rösch, Jürgen & Schultz, Luis Manuel, 2015. "Do buyer groups facilitate collusion?," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 72-84.

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