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Frequent interactions and quick price adjustments facilitate collusion by shortening the time of reaction to deviations from the collusive agreement. This implies that times for punishment are reduced, and retaliation becomes more credible and frightening, whereas the gains from deviation can be enjoyed for shorter.

Market transparency/private information

The presence of private information on the market, as opposed to the case where all information is public, makes collusion harder to sustain. Indeed, limited market transparency hinder the uncovering of deviations and the severity of the punishment that can be imposed.

Cost asymmetries/quality differences

Cost asymmetries and vertical product differentiation, that is, product differentiated on the basis of quality, restrict the room for sustained collusion. Because of such differences, firms might find it harder to get to an agreement on the collusive price. Moreover, low-cost or high quality firms are hard to discipline as the harm that their high-cost or low quality rivals can inflict upon them by triggering a price war is limited. Either an attempt to overcome this latter problem by sharing profits asymmetrically so as to deter low-cost or high quality firms from deviating could not stabilize the cartel, as the very same problem would arise for high-cost or low quality firms.

Horizontal product differential

Collusion is ambiguously affected by horizontal product differentiation, that is, differentiation by offering products at comparable prices but in different combinations of characteristics such as colour, shape, location. When products are horizontally differentiated, different consumers rank equally priced products differently because of the different characteristics of goods. This decreases the elasticity of demand faced by any single firm; for any given price differential, consumers are more reluctant to abandon their favourite variety. Therefore, firms have less incentive to deviate as however they could only capture a minor amount of extra demand. However, a lower elasticity of demand also limit firms' retaliatory power, by reducing the harm that can be inflicted by launching a price war. The final result of these opposite effects cannot be anticipated as it will depend on the case under scrutiny.

Multi-market contact

Multi-market contact acts as an expansion of the market where the firms compete. This has an ambiguous effect: on one hand it magnifies the gains of deviation, while on the other it increases the strength of the resulting punishments. In symmetric settings, the two effects are null, but in case of asymmetric settings, when firms/markets/technologies differ, multi-market contact may foster collusion.

Cross-ownership

On the one side, cross ownership weakens the incentive of firms to deviate by internalizing part of the losses inflicted on rivals when deviating. On the other side, cross ownership may also soften the firms' incentive to impose a harsh punishment, hence making deviation本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。