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Abstract:

Economics of Industry Paper
Second-Hand Markets and Collusion by Manufacturers of Semidurable Goods
Pasquale Schiraldi
September 2009
Paper No' EI 48:
Full Paper (pdf)

JEL Classification: D21, D43, L11, L13, L25.


Tags: bertrand competition; buy-back policies; collusion; leasing; semi-durability; second-hand market; warranty.

The focus of the present work is to study the impact of the second-hand market the collusive behavior. I analyze firms’ preferences for having an active second-hand market and whether policies (i.e. leasing policy, buy-back policy and warranty policy) that affect the functioning of the second-hand market strengthen collusion. I show how collective incentives to adopt strategies that strengthen collusion often differ from monopoly incentives to achieve higher profits.