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| Kai Andree and Mike Schwan |
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| ''Collusive Market Sharing with Spatial Competition'' |
| ( 2012, Vol. 32 No.4 ) |
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| This paper develops a spatial model to analyze the stability of a market sharing agreement between two firms. We find that the stability of the cartel depends on the relative market size of each firm. Collusion is not attractive for firms with a small home market, but the incentive for collusion increases when the firm's home market is getting larger relative to the home market of the competitor. The highest stability of a cartel and additionally the highest social welfare is found when regions are symmetric.
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| Keywords: Spatial Competition, Market Sharing, Collusion |
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| Manuscript Received : Nov 05 2012 | | Manuscript Accepted : Dec 11 2012 |
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