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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...
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This paper analyses how the endogenous detection of an upstream cartel by a down-stream buyer allows the detecting firm … to raise rivals' cost. We model a market with a vertical structure, where a stable all-inclusive cartel is operating in … cartel, while the existence of the cartel remains unknown to its competitor. The model shows that the detecting firm can …
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