Consumer-surplus-enhancing collusion and trade

• Type: Article in International Scientific Journal
• Date: 2012

Authors

George Deltas (Author) Other; Alberto Salvo (Author) Other; Helder Vasconcelos (Author) FEP

Journal

Title: RAND Journal of Economics

Vol. 43 No. 2

Pages: 315-328

ISSN: 0741-6261

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 10 Citations

ISI Web of Science

Scopus - 11 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

Associated Projects

PTDC/EGE-ECO/099784/2008 - Modelos em "Antitrust Economics"

Other information

Authenticus ID: P-002-9CR

DOI: 10.1111/j.1756-2171.2012.00167.x

Abstract (EN): That collusion among sellers hurts buyers is a central tenet in economics. We provide an oligopoly model in which collusion can raise consumer surplus. A differentiated-product duopoly operates in two geographically separated markets. Each market is home to a single firm, but can import, at a cost, from the foreign firm. Under some circumstances, a perfect cartel, relative to duopolistic competition, raises the price of the imported good and lowers the price of the home good. This raises welfare for most consumers and increases aggregate consumer surplus. A similar possibility result applies to autarky. Our analysis applies beyond the spatial setting.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 14