Open AccessWelfare Enhancing Collusion In A Service Provision Model
Author(s) -
Evan Moore,
James Boswell
Publication year - 1970
Publication title -
journal of business strategies
Language(s) - English
Resource type - Journals
eISSN - 2162-6901
pISSN - 0887-2058
DOI - 10.54155/jbs.29.1.43-55
Subject(s) - collusion , cournot competition , microeconomics , welfare , profit maximization , industrial organization , homogeneous , economics , business , service (business) , profit (economics) , marketing , market economy , physics , thermodynamics
This paper provides a model of service provision with homogeneous goodsthat allows for welfare comparisons between firms engaged in Cournot-type competitionand joint-profit maximization. An important factor in this analysis is the role ofservice provision on the demand for the product. We find that collusion can be socialwelfare enhancing in a static framework and show that under certain conditions bothconsumers and producers can benefit from collusion; this occurs if the number offirms in the market exceeds roughly 20.4 firms. Additionally, we present a collusiveresult that we have not found elsewhere in the literature.