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Stefano Colombo
''The unidirectional Hotelling model with spatial price discrimination''
( 2009, Vol. 29 No.4 )
The unidirectional Hotelling model where consumers can buy only from firms located on their right (left) is extended to allow for price discriminating firms and a general class of transportation costs. In a two-stage location-price game one firm locates at 1/2 and the other locates at 1 (0). We also study collusion in an infinitely repeated game. The maximum collusive profits sustainable in equilibrium monotonically increase (decrease) with the location of the firm located at the right (left), while initially increase and then decrease with the location of the firm located at the left (right). A higher reservation price of consumers makes perfect collusion less sustainable in equilibrium, but allows firms to agree on higher (albeit imperfect) collusive profits.
Keywords: Unidirectional Hotelling model; Price discrimination; Location-price game; Tacit collusion
JEL: D4 - Market Structure and Pricing: General
L4 - Antitrust Issues and Policies: General
Manuscript Received : Sep 03 2009 Manuscript Accepted : Dec 06 2009

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