but can supply a rival's market by incurring distance costs. We show that the width and degree of overlap in the product … lines is greater in large markets and when the products are more differentiated. Distance costs affect not only the firms … and more overlapped when distance costs are low and when they are high; while product lines are narrower, with less …

substitutes and trade costs are sufficiently high, a marginal reduction in trade costs facilitates collusion. Exactly the opposite … is true if, for any given degree of product substitutability, trade costs are sufficiently low. We also study the …