Collusion, agglomeration, and heterogeneity of firms

Abstract

Jehiel (1992) and Friedman and Thisse (1993) show that spatial agglomeration appears in a standard two-stage location price model if symmetric firms collude in prices. We introduce a cost difference between two firms. We show that agglomeration never appears in a collusive equilibrium even when the cost difference between firms is sufficiently small.

Endogenous Flexibility in the Flexible Manufacturing System

“…In this paper, we restrict our attention to the symmetric case and symmetric equilibrium. In the context of spatial competition, the cost asymmetry often leads to some curious results (Liang and Mai, ; Matsumura and Matsushima, , , ; Meza and Tombak, ). Extending our analysis of FMS to the asymmetric cost structure is a task that remains for future research.…”

Product Differentiation in a Vertical Structure

“…Matsushima (2004Matsushima ( , 2009 show that when the transport costs faced by the upstream firms are small or the difficulty in converting inputs to the final goods is low (which are comparable to our case with no transportation cost faced by the upstream firms or no difficulty in converting inputs to the final goods), the firms prefer maximal differentiation. Considering bilateral bargaining between the input supplier and the final goods 3 Matsumura and Matsushima (2011) show that minimal differentiation does not occur in a collusive equilibrium if the firms differ in costs. 4 Although majority of papers using the Hotelling framework consider that firms locate within the "Hotelling line", there are papers which don't restrict firms to locate within the Hotelling line.…”

Competitiveness and Stability of Collusive Behavior

“…Even a slight cost difference can change the result drastically. For example, Matsumura and Matsushima (2011) showed that even a slight cost difference changes the property of equilibrium location in location‐collusion models.…”