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Journal of Economics

, Volume 86, Issue 3, pp 259–292 | Cite as

Cartel Stability in a Delivered Pricing Oligopoly

  • Toshihiro Matsumura
  • Noriaki Matsushima
Article

Abstract

Using the spatial price discrimination framework, the relationship between the locations of firms and their ability to collude is investigated. Gupta and Venkatu (2002) show that in a duopoly model agglomeration at one point is the most stable location. We find that agglomeration stabilizes the cartel when there are three firms, too. When there are more than three firms, however, agglomeration of all firms is never the most stable location. With four firms, the following location pattern produces the most stable cartel: two firms at one point and the other two at the farthest point from the first two.

Keywords

tacit collusion spatial price discrimination anti-trust 

JEL Classification

D43 L41 R32 

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Copyright information

© Springer Wien NewYork 2005

Authors and Affiliations

  1. 1.Institute of Social ScienceUniversity of TokyoTokyoJapan
  2. 2.Graduate School of Business AdministrationKobe UniversityHyogoJapan

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