TY - JOUR
T1 - Disadvantageous semicollusion
AU - Fershtman, Chaim
AU - Gandal, Neil
PY - 1994/6
Y1 - 1994/6
N2 - Standard analysis in industrial organization indicates that firms earn higher profits if they collude rather than compete on prices (or quantities). However, firms choose other strategic variables, such as investment in capacity or R & D, in addition to choosing prices or production levels. Thus the overall evaluation of product market collusion must take into account its effect on the interaction in the other dimensions. This paper demonstrates that collusion in the product market may yield lower overall profits because it intensifies competition in the other dimensions of the interaction.
AB - Standard analysis in industrial organization indicates that firms earn higher profits if they collude rather than compete on prices (or quantities). However, firms choose other strategic variables, such as investment in capacity or R & D, in addition to choosing prices or production levels. Thus the overall evaluation of product market collusion must take into account its effect on the interaction in the other dimensions. This paper demonstrates that collusion in the product market may yield lower overall profits because it intensifies competition in the other dimensions of the interaction.
UR - http://www.scopus.com/inward/record.url?scp=21344483675&partnerID=8YFLogxK
U2 - 10.1016/0167-7187(94)90010-8
DO - 10.1016/0167-7187(94)90010-8
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AN - SCOPUS:21344483675
SN - 0167-7187
VL - 12
SP - 141
EP - 154
JO - International Journal of Industrial Organization
JF - International Journal of Industrial Organization
IS - 2
ER -
