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Branding and Collusion in Vertically Differentiated Industries

Garcia, Daniel (2014): Branding and Collusion in Vertically Differentiated Industries.

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Abstract

This paper presents a model of collusion in vertically differentiated industries where firms have the option to make their products distinguishable to consumers by attaching a brand. We show that if consumers’ preferences are linear in the quality dimension and their beliefs satisfy a standard refinement, collusion is facilitated in the absence of brands. More precisely, we show that if collusion is feasible with brands it is also feasible without them

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