Abstract
This paper investigates firms' abilities to tacitly collude when they each monopolize a proprietary aftermarket. When firms' aftermarkets are completely isolated from foremarket competition, they cannot tacitly collude more easily than single-product firms. However, when their aftermarket power is contested by foremarket competition as equipment owners view new equipment as a substitute for their incumbent firm's aftermarket product, profitable tacit collusion is sustainable among a larger number of firms. Conditions under which introduction of aftermarket competition hinders firms' ability to tacitly collude are characterized.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 852-879 |
| Number of pages | 28 |
| Journal | Journal of Economics and Management Strategy |
| Volume | 25 |
| Issue number | 4 |
| DOIs | |
| State | Published - Dec 1 2016 |
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics
- Strategy and Management
- Management of Technology and Innovation