Competition and Collusion with Fixed Output

9 Pages Posted: 19 Apr 2013 Last revised: 22 May 2013

See all articles by Hans Zenger

Hans Zenger

European Union - Directorate General for Competition

Date Written: April 6, 2013

Abstract

In many industries, output is fixed by exogenous constraints, so firms compete by allocating a given stock of supplies between different markets. This paper shows that collusion in such industries leads firms to shift output from high-margin markets to low-margin markets. As a result, welfare is generally reduced although prices decrease in some markets and increase in others.

Keywords: collusion, fixed output, price discrimination

JEL Classification: L41, L13

Suggested Citation

Zenger, Hans, Competition and Collusion with Fixed Output (April 6, 2013). Economics Letters, Vol. 120, No. 2, pp. 259-261, 2013, Available at SSRN: https://ssrn.com/abstract=2253967

Hans Zenger (Contact Author)

European Union - Directorate General for Competition ( email )

Place Madou, Madouplein 1
Saint-Josse-ten-Noode/Sint-Joost-ten-Noode
Brussels, B-1049
Belgium

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