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Product differentiation and the sustainability of collusion
Collusive pricing on markets for vertically differentiated
a study of reciprocal externalities
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a/b is larger aggregate demand aggressive strategy assumption Bertrand competition Bertrand game capacity cartel stability chapter choose collusive agreement collusive payoffs collusive prices result competition consumer surplus consumption externalities d'Aspremont decreasing denote deviation strategy Differentiating equilibrium discount factor restriction disutility costs duopoly Economic effect on fleet entire market entry equilibrium price equilibrium quantity factor is high firm l deviates firm l's optimal fixed cost fleet size affects framework full market coverage Gabszewicz and Thisse h-firm Hackner Hence high-quality firm Hotelling 1929 implicit function theorem implying industry joint profit maximization Journal l's optimal deviation lemma marginal cost maximize profits Nash equilibrium negative externality non-collusive number of firms one-shot optimal deviation price partial market coverage partial theft payoffs increase product design product differentiation profit function punishment phase RDSs reduced regime repeated game right-hand side Scotchmer sunk cost sustain collusion symmetric equilibrium taxi services taxicabs total theft unconstrained monopoly pricing waiting yields