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Product Innovation and Stability of Collusion

Author

Listed:
  • Sougata Poddar

    (Hanyang University, Seoul, Korea and Nanyang Technological University, Singapore)

  • Bibhas Saha

    (University of East Anglia)

Abstract

We study the nature of market competition in relation to stability of collusion in the infinitely repeated play of a two-stage game of product innovation and market competition, and show that cooperation in giving R&D efforts is more easily sustained when firms compete in quantity than in price.

Suggested Citation

  • Sougata Poddar & Bibhas Saha, 2010. "Product Innovation and Stability of Collusion," Economics Bulletin, AccessEcon, vol. 30(2), pages 1392-1400.
    • Handle: RePEc:ebl:ecbull:eb-09-00514
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P129.pdf
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    References listed on IDEAS

    as
    1. Deneckere, R., 1983. "Duopoly supergames with product differentiation," Economics Letters, Elsevier, vol. 11(1-2), pages 37-42.
    2. Rothschild, R., 1992. "On the sustainability of collusion in differentiated duopolies," Economics Letters, Elsevier, vol. 40(1), pages 33-37, September.
    3. Lambertini, Luca, 1997. "Prisoners' Dilemma in Duopoly (Super)Games," Journal of Economic Theory, Elsevier, vol. 77(1), pages 181-191, November.
    4. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    5. Lambertini, Luca & Rossini, Gianpaolo, 1998. "Product homogeneity as a prisoner's dilemma in a duopoly with R&D," Economics Letters, Elsevier, vol. 58(3), pages 297-301, March.
    6. Albaek, Svend & Lambertini, Luca, 1998. "Collusion in differentiated duopolies revisited," Economics Letters, Elsevier, vol. 59(3), pages 305-308, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kazuhiro Takauchi & Tomomichi Mizuno, 2019. "Consumer-benefiting transport cost: The role of product innovation in a vertical structure," Discussion Papers 1911, Graduate School of Economics, Kobe University.

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    More about this item

    Keywords

    R&D Effort; Product differentiation; Collusion;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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