IDEAS home Printed from https://ideas.repec.org/p/ags/uwarer/269361.html
   My bibliography  Save this paper

Leadership Cartels in Industries with Differentiated Products

Author

Listed:
  • Posada, Pedro

Abstract

This article analyses cartels that act as a Stackelberg leader with respect to a competitive fringe in industries supplying di¤erentiated products. The main objectives are to investigate how cartel stability changes with the degree of di¤erentiation and the cartel size, to predict endogenous cartels and to carry out a welfare analysis. Both repeated and static games are considered as well as industries competing in quantities and prices. The results indicate that the degree of stability can be either an increasing, decreasing or non-monotonic function of the degree of product di¤erentiation, depending on the cartel size, the industry size, the competition type and the reaction of cartel loyal members to defection. An endogenous cartel size is also predicted. Other signi…cant results are: some cartels can be sustained under simple static game Nash equilibrium, some cartels may be socially desirable, not all cartels are beneficial for the fringe members and a free riding problem does not necessarily emerge.

Suggested Citation

  • Posada, Pedro, 2001. "Leadership Cartels in Industries with Differentiated Products," Economic Research Papers 269361, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269361
    DOI: 10.22004/ag.econ.269361
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/269361/files/twerp590.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/269361/files/twerp590.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.269361?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Majerus, David W., 1988. "Price vs. quantity competition in oligopoly supergames," Economics Letters, Elsevier, vol. 27(3), pages 293-297.
    3. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    4. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(1), pages 1-12.
    5. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    6. Rothschild, R., 1992. "On the sustainability of collusion in differentiated duopolies," Economics Letters, Elsevier, vol. 40(1), pages 33-37, September.
    7. Posada, P., 2000. "Cartel Stability and Product Differentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?," The Warwick Economics Research Paper Series (TWERPS) 556, University of Warwick, Department of Economics.
    8. R. Rothschild, 1997. "Product differentiation and cartel stability: Chamberlin versus Hotelling," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 31(3), pages 259-271.
    9. Daniel F. Spulber, 1989. "Regulation and Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262192756, April.
    10. Posada, Pedro, 2000. "Cartel Stability and Product Di¤erentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?," Economic Research Papers 269307, University of Warwick - Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariana Cunha & Paula Sarmento, 2014. "Does Vertical Integration Promote Downstream Incomplete Collusion? An Evaluation of Static and Dynamic Stability," Journal of Industry, Competition and Trade, Springer, vol. 14(1), pages 1-38, March.
    2. Marc Escrihuela-Villar, 2009. "Does cartel leadership facilitate collusion?," DEA Working Papers 39, Universitat de les Illes Balears, Departament d'Economía Aplicada.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Posada, P., 2001. "Leadership Cartels in Industries with Differentiated Products," The Warwick Economics Research Paper Series (TWERPS) 590, University of Warwick, Department of Economics.
    2. Posada, Pedro, 2000. "Cartel Stability and Product Di¤erentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?," Economic Research Papers 269307, University of Warwick - Department of Economics.
    3. Lambertini, Luca, 1997. "Prisoners' Dilemma in Duopoly (Super)Games," Journal of Economic Theory, Elsevier, vol. 77(1), pages 181-191, November.
    4. Lambertini, Luca & Schultz, Christian, 2003. "Price or quantity in tacit collusion?," Economics Letters, Elsevier, vol. 78(1), pages 131-137, January.
    5. Baldelli, Serena & Lambertini, Luca, 2006. "Price vs quantity in a duopoly supergame with Nash punishments," Research in Economics, Elsevier, vol. 60(3), pages 121-130, September.
    6. Marc Escrihuela-Villar, 2009. "Does cartel leadership facilitate collusion?," DEA Working Papers 39, Universitat de les Illes Balears, Departament d'Economía Aplicada.
    7. Andaluz, Joaquín, 2010. "Cartel sustainability with vertical product differentiation: Price versus quantity competition," Research in Economics, Elsevier, vol. 64(4), pages 201-211, December.
    8. Lambertini, L. & Sasaki, D., 1999. "A Cost-Side Analysis on Collusive Sustainability," Department of Economics - Working Papers Series 710, The University of Melbourne.
    9. F. Delbono & L. Lambertini, 2016. "On Globally Optimal Punishments in the Repeated Cournot Game," Working Papers wp1091, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. L. Lambertini, 1994. "Delegation and Cartel Stability," Working Papers 208, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Luca Lambertini, 2000. "Technology and Cartel Stability under Vertical Differentiation," German Economic Review, Verein für Socialpolitik, vol. 1(4), pages 421-442, November.
    12. Lambertini, Luca & Marattin, Luigi, 2021. "On prices’ cyclical behaviour in oligopolistic markets," Research in Economics, Elsevier, vol. 75(1), pages 79-86.
    13. Savorelli, Luca, 2012. "Asymmetric cross-price effects and collusion," Research in Economics, Elsevier, vol. 66(4), pages 375-382.
    14. David Collie, 2004. "Collusion and the elasticity of demand," Economics Bulletin, AccessEcon, vol. 12(3), pages 1-6.
    15. Lambertini, Luca, 1996. "Cartel Stability and the Curvature of Market Demand," Bulletin of Economic Research, Wiley Blackwell, vol. 48(4), pages 329-334, October.
    16. Ari Hyytinen & Frode Steen & Otto Toivanen, 2019. "An Anatomy of Cartel Contracts," The Economic Journal, Royal Economic Society, vol. 129(621), pages 2155-2191.
    17. Posada, P., 2000. "Cartel Stability and Product Differentiation: How Much Do the Size of the Cartel and the Size of the Industry Matter?," The Warwick Economics Research Paper Series (TWERPS) 556, University of Warwick, Department of Economics.
    18. Rothschild, R., 1995. "Sustaining collusion when the choice of strategic variable is endogenous," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 373-385, December.
    19. David R. Collie, 2006. "Collusion in Differentiated Duopolies with Quadratic Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 58(2), pages 151-159, April.
    20. Davide Dragone, 2007. "Should One Sell Domestic Firms to Foreign Ones? A Tale of Delegation, Acquisition and Collusion," Rivista di Politica Economica, SIPI Spa, vol. 97(3), pages 85-112, May-June.

    More about this item

    Keywords

    Industrial Organization; Public Economics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:uwarer:269361. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.