Cartels in the unidirectional Hotelling model

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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 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 firms to sustain collusion in equilibrium. On the other hand, when the firm located to the right has the greater incentive to deviate, greater spatial distance makes collusion easier to sustain in equilibrium. These results substantially differ from the bidirectional Hotelling model.
Original languageEnglish
Pages (from-to)690-696
Number of pages7
JournalEconomic Modelling
Publication statusPublished - 2013

Keywords

  • Hotelling

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