This paper generalizes the classical duopoly collusion model by first deriving a new marginal cost curve. It then … have higher incentive to collude. It also distinguishes free collusion from centralized collusion, competition from …

difficult to sustain collusion when it is costly either to coordinate or to maintain collusion. These results contrast with the … collusion under some common models of product differentiation, but is consistent with the empirical literature that suggests … that collusion tends to occur most among homogeneous firms. Further, we show that costly monitoring can be compatible with …