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Kai Andree and Mike Schwan
 
''Collusive Market Sharing with Spatial Competition''
( 2012, Vol. 32 No.4 )
 
 
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.
 
 
Keywords: Spatial Competition, Market Sharing, Collusion
JEL: L0 - Industrial Organization: General
D0 - Microeconomics: General
 
Manuscript Received : Nov 05 2012 Manuscript Accepted : Dec 11 2012

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