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Full-Text Articles in Social and Behavioral Sciences
Product Differentiation, Uncertainty And The Stability Of Collusion, Michael Raith
Product Differentiation, Uncertainty And The Stability Of Collusion, Michael Raith
Michael Raith
The conventional view that product heterogeneity limits the scope for collusion among oligopolists has been challenged in recent theoretical work. This paper provides an argument in support of the conventional view by emphasising the role of uncertainty. I introduce the idea that, with stochastic demand, an increase in the heterogeneity of products leads to a decrease in the correlation of the firms’ demand shocks. With imperfect monitoring, this makes collusion more difficult to sustain, as discriminating between random demand shocks and marginal deviations from the cartel strategy becomes more difficult. These effects are illustrated within a Hotelling-type duopoly model.
Spatial Retail Markets With Commuting Consumers, Michael Raith
Spatial Retail Markets With Commuting Consumers, Michael Raith
Michael Raith
In this paper we analyse a model of spatial competition with commuting consumers due to Claycombe (1991, International Journal of Industrial Organization 9, 303-313). We show that results different from Claycombe's are obtained if a rigorous game-theoretic analysis is applied to the model. Our results provide a theoretical basis for a later study carried out by Claycombe and Mahan (1993, International Journal of Industrial Organization 11,283-291) and lead to predictions which are in line with the empirical results of that later study. For small commuting distances (relative to the distance between firms), there exists a symmetric equilibrium in which the …
A General Model Of Information Sharing In Oligopoly, Michael Raith
A General Model Of Information Sharing In Oligopoly, Michael Raith
Michael Raith
Under which conditions do oligopolists have an incentive to share private information about a stochastic demand or stochastic costs? We present a general model which encompasses virtually all models of the existing literature on information sharing as special cases. Within this unifying framework we show that in contrast to the apparent inconclusiveness of previous results some simple principles determining the incentives to share information can be obtained. Existing results are generalized, some previous interpretations are questioned, and new explanations offered, leading to a single general theory for a large class of models. Journal of Economic Literature Classification Numbers C72, C73, …