TY  - JOUR
A1  - Andree, Kai
A1  - Heywood, John S.
A1  - Schwan, Mike
A1  - Wang, Zheng
T1  - A spatial model of cartel stability
BT  - the influence of production cost convexity
JF  - Bulletin of economic research
N2  - We uniquely introduce convex production costs into a cartel model involving spatial price discrimination. We demonstrate that greater convexity improves cartel stability and that for sufficient convexity first best locations will be adopted. We show that allowing locations to vary over the game reduces cartel stability but that greater convexity continues to improve that stability. Moreover, when the degree of convexity does not support the first best collusive locations, other collusive locations exist that require less stability and these may either increase or decrease social welfare relative to competition. Critically, these locations that require less stability are more dispersed in sharp contrast to the known result assuming linear production costs.
KW  - cartel stability
KW  - convex costs
KW  - delivered pricing
Y1  - 2018
U6  - https://doi.org/10.1111/boer.12149
SN  - 0307-3378
SN  - 1467-8586
VL  - 70
IS  - 3
SP  - 298
EP  - 311
PB  - Wiley
CY  - Hoboken
ER  -