Premium
Spatial pricing and collusion
Author(s) -
Heywood John S.,
Li Dongyang,
Ye Guangliang
Publication year - 2021
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12327
Subject(s) - collusion , price discrimination , microeconomics , economics , price fixing , quadratic equation , econometrics , industrial organization , mathematics , geometry
The stability of collusion is compared assuming quadratic transport costs under two spatial pricing schemes, uniform mill pricing and spatial price discrimination. This comparison uniquely allows fully endogenous location choice and examines when two firms collude, when two of three firms collude and when three firms collude. Spatial price discrimination facilitates collusion more than uniform pricing in the first two of the three examinations but not in the third. This heterogeneity argues that the presence of price discrimination by itself does not inform antitrust authorities about the likelihood of collusion.