Please use this identifier to cite or link to this item:
Savorelli, Luca
Year of Publication: 
Series/Report no.: 
Quaderni - Working Paper DSE 715
Asymmetries in cross-price elasticities have been demonstrated by several empirical studies. In this paper we study from a theoretical stance how introducing asymmetry in the substitution effects influences the sustainability of collusion. We characterize the equilibrium of a linear Cournot duopoly with substitute goods, and consider substitution effects which are asymmetric in magnitude. Within this framework, we study partial collusion using Friedman (1971) solution concept. Our main result shows that the interval of quantities supporting collusion in the asymmetric setting is always smaller than the interval in the symmetric benchmark. Thus, the asymmetry in the substitution effects makes collusion more difficult to sustain. This implies that previous Antitrust decisions could be reversed by considering the role of this kind of asymmetry.
Persistent Identifier of the first edition: 
Creative Commons License:
Document Type: 
Working Paper

Files in This Item:
449.83 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.