Welfare Enhancing Collusion In A Service Provision Model


Service Provision
Profit Maximization
Social Welfare

How to Cite

Welfare Enhancing Collusion In A Service Provision Model. (2012). Journal of Business Strategies, 29(1), 43-55. https://doi.org/10.54155/jbs.29.1.43-55


This paper provides a model of service provision with homogeneous goods
that allows for welfare comparisons between firms engaged in Cournot-type competition
and joint-profit maximization. An important factor in this analysis is the role of
service provision on the demand for the product. We find that collusion can be social
welfare enhancing in a static framework and show that under certain conditions both
consumers and producers can benefit from collusion; this occurs if the number of
firms in the market exceeds roughly 20.4 firms. Additionally, we present a collusive
result that we have not found elsewhere in the literature.


This article is distributed using a Creative Commons Attribution-NonCommercial 4.0 license. Copyright remains with the author(s).