We study cartel stability in a differentiated price-setting duopoly with returns
to scale. We show that a cartel may be equally stable in the presence of lower
differentiation, provided that the decreasing returns parameter is high. In addition
we demonstrate that for a given factor of discount, there are technologies
that can have decreasing returns to scale where the cartel always is stable
independent of the differentiation degree.
Keywords:
Collusion, product differentiation, decreasing returns to scale
Contreras, R. (2016). Collusion in a Bertrand duopoly model with decreasing returns and product differentiation. Estudios De Economía, 35(1), pp. 19–31. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40235
