Costly Collusion in Differentiated Industries

Thomadsen, Raphael; Ki-Eun Rhee
September 2007
Marketing Science;Sep/Oct2007, Vol. 26 Issue 5, p660
Academic Journal
This paper demonstrates that increased product differentiation will make it more difficult to sustain collusion when it is costly to coordinate or maintain collusion. This result holds for a wide range of models, including all those commonly used to model competition between differentiated products. This contrasts with the previous theoretical literature, which shows that, in the absence of these costs, greater differentiation can help foster collusion under some common models of product differentiation but is consistent with the empirical literature, which suggests that collusion tends to occur most among homogeneous firms.


Related Articles

  • The (Price) Core of a Bertrand–Edgeworth Economy. Furth, Dave // Journal of Economics;2003, Vol. 78 Issue 1, p57 

    In this paper, a solution concept from cooperative game theory is applied to a special kind of oligopolistic markets. Traditionally, oligopoly theory uses non-cooperative game theory. The cooperative solution concept, the Price Core, has been specially developed for this paper. In contrast to...

  • Consumer Fit Search, Retailer Shelf Layout, and Channel Interaction. Gu, Zheyin (Jane); Yunchuan Liu // Marketing Science;Jul/Aug2013, Vol. 32 Issue 4, p652 

    This study examines the strategic implications of retailer shelf layout decisions in a market characterized by consumer fit uncertainty. A retailer can display competing products in the same location, allowing consumers to inspect various products all at once or in distant locations, which...

  • The Length of Product Line in Distribution Channels. Yunchuan Liu; Cui, Tony Haitao // Marketing Science;May/Jun2010, Vol. 29 Issue 3, p474 

    This paper studies a manufacturer's optimal decisions on extending its product line when the manufacturer sells through either a centralized channel or a decentralized channel. We show that a manufacturer may provide a longer product line for consumers in a decentralized channel than in a...

  • Monotonicity and Consistency in Matching Markets. Toda, Manabu // International Journal of Game Theory;2006, Vol. 34 Issue 1, p13 

    Objective: To obtain axiomatic characterizations of the core of one-to-one and one-to-many matching markets. Methods: The axioms recently applied to characterize the core of assignment games were adapted to the models of this paper. Results: The core of one-to-one matching markets is...

  • The evolutionary stability of perfectly competitive behavior. Alós-Ferrer, Carlos; Ania, Ana B. // Economic Theory;Oct2005, Vol. 26 Issue 3, p497 

    In a (generalized) symmetric aggregative game, payoffs depend only on individual strategy and an aggregate of all strategies. Players behaving as if they were negligible would optimize taking the aggregate as given. We provide evolutionary and dynamic foundations for such behavior when the game...

  • Endogeneity in Marketing Decision Models. Shugan, Steven M. // Marketing Science;Winter2004, Vol. 23 Issue 1, p1 

    There are many critical concerns (including the accounting for endogeneity) when one is properly estimtating response functions. However, it is sometimes (certainly not always) better to leave some variables exogenous when building mathematical models intended to help decision makers. The...

  • Games of capacity allocation in many-to-one matching with an aftermarket. Mumcu, Ayşe; Saglam, Ismail // Social Choice & Welfare;Sep2009, Vol. 33 Issue 3, p383 

    In this paper, we study many-to-one matching (hospital–intern markets) with an aftermarket. We first show that every stable matching system is manipulable via aftermarket. We then analyze the Nash equilibria of capacity allocation games, in which preferences of hospitals and interns are...

  • To win more, lose less, use game theory in marketing, says Normile.  // Marketing News;11/21/1975, Vol. 9 Issue 10, p7 

    Focuses on the use of game theory in marketing according to Michael Normille, president of Norsearch International Inc. Overview of the game theory; Advantages associated with game theory; Economic factors that contributed to the desirability of game theory.

  • How Often Should Reputation Mechanisms Update a Trader's Reputation Profile?  // Information Systems Research;Sep2006, Vol. 17 Issue 3, p271 

    Reputation mechanisms have become an important component of electronic markets, helping to build trust and elicit cooperation among loosely connected and geographically dispersed economic agents. Understanding the impact of different reputation mechanism design parameters on the resulting market...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics