Competition, Collusion and Spatial Sales Patterns - Theory and Evidence

Matthias Hunold, Kai Hüschelrath, Ulrich Laitenberger, Johannes Muthers

Research output: Working paperDiscussion paperOther research output

Abstract

We study competition in markets with transport costs and capacity constraints. We compare the outcomes of price competition and coordination in a theoretical model and find that when firms compete, they more often serve more distant customers who are closer to the competitor’s plant. If firms compete, the transport distance varies in the degree of overcapacity, but not if they coordinate their sales. Using a rich micro-level data set of the cement industry in Germany, we study a cartel breakdown to identify the effect of competition on transport distances. Our econometric analyses confirm the theoretical predictions.
Original languageEnglish
PublisherZEW Leibniz Centre for European Economic Research
DOIs
Publication statusPublished - 9 Jan 2018
Externally publishedYes

Publication series

NameZEW - Centre for European Economic Research Discussion Paper
No.17-035

Keywords

  • Capacity constraints
  • cartel
  • cement
  • spatial competition
  • transport costs

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