In this paper, we show that the price and profit under full collusion, in which firms collude with respect to both price and location, are higher than those under partial collusion, in which firms collude with respect to price only. And we also show that Löschian competition is equal to full collusion. In other words, the price, profit and even social surplus under Löschian competition are higher, not lower, just like Hwang et al (1993) stressed, than those under (partial) collusion. The cause that makes our findings different from those in Hwang et al (1993) is the location choice, exogenous-sly given or endogenously determined.
Relation:
Journal of Statistics & Management Systems 11(2), pp.375-386