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Cartels in the unidirectional Hotelling model

Authors
Journal
Economic Modelling
0264-9993
Publisher
Elsevier
Volume
31
Identifiers
DOI: 10.1016/j.econmod.2013.01.028
Keywords
  • Unidirectional Hotelling Model
  • Cartels
  • Bertrand
  • Cournot

Abstract

Abstract We study the impact of space on perfect collusion sustainability within the unidirectional Hotelling model where the firms are constrained to move to the left. We obtain that when the firm that located to the left of the Hotelling segment has the greater incentive to deviate, the distance between the firms has a negative impact on the capability of the firms to sustain the collusion in equilibrium. On the other hand, when the firm that located to the right has the greater incentive to deviate, greater spatial distance makes the collusion easier to sustain in equilibrium. These results substantially differ from the bidirectional Hotelling model.

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