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Competition, Collusion, and Spatial Sales Patterns: Theory and Evidence*
Author(s) -
Hunold Matthias,
Hüschelrath Kai,
Laitenberger Ulrich,
Muthers Johannes
Publication year - 2020
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12237
Subject(s) - cartel , collusion , competition (biology) , industrial organization , business , empirical evidence , microeconomics , economics , ecology , philosophy , epistemology , biology
This article studies competition in markets with transport costs and capacity constraints. Using a rich micro‐level data set of the cement industry in Germany, we study a cartel breakdown to identify the effect of competition on transport distances. We find that when firms compete, they more often serve more distant customers. Moreover, the transport distance also varies in the ratio of capacity relative to demand, but only if firms compete and not when they coordinate their sales. We provide a theoretical model of spatial competition with capacity constraints that rationalizes the empirical results.