Abstract

http://ssrn.com/abstract=1683342
 
 

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Collusion at the Extensive Margin


Martin C. Byford


RMIT University - School of Economics, Finance and Marketing

Joshua S. Gans


University of Toronto - Rotman School of Management; NBER

December 12, 2012


Abstract:     
This paper is the first to examine collusion at the extensive margin (whereby firms collude by avoiding entry into each other's markets or territories). We demonstrate that such collusion offers distinct predictions for the role of multiple markets in sustaining collusion such as the use of proportionate response enforcement mechanisms, the possibilities of oligopolistic competition with a collusive fringe, and predatory entry. We argue that collusion at the extensive margin poses dicult issues for antitrust authorities relative to its intensive margin counterpart.

Number of Pages in PDF File: 52

Keywords: Collusion, Credible Threats, Proportional Response, Segmented Markets, Multi-Market Contact, Predatory Entry, Markov Perfect Equilibrium

JEL Classification: C73, L4

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Date posted: September 28, 2010 ; Last revised: December 12, 2012

Suggested Citation

Byford, Martin C. and Gans, Joshua S., Collusion at the Extensive Margin (December 12, 2012). Available at SSRN: http://ssrn.com/abstract=1683342 or http://dx.doi.org/10.2139/ssrn.1683342

Contact Information

Martin C. Byford
RMIT University - School of Economics, Finance and Marketing ( email )
Business
Level 12, 239 Bourke Street
Melbourne, Victoria 3000
Australia
Joshua S. Gans (Contact Author)
University of Toronto - Rotman School of Management ( email )
Canada
HOME PAGE: http://www.joshuagans.com

NBER ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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