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Author: | Baumol, W. J. |
Title: | Horizontal collusion and innovation |
Journal: | Economic Journal
1992 : JAN, VOL. 102:410, p.129-137 |
Index terms: | COMPETITION CARTELS INNOVATION PRICES WELFARE MONOPOLY |
Language: | eng |
Abstract: | Collusion among horizontal competitors (a horizontal price cartel) has long been the most controversial issue of monopoly policy. Collusion is perhaps the most direct means to undermine competition. It is generally agreed that coordination by rivals of their prices and outputs damages the general welfare. Yet, recent analysis has suggested that there are arenas in which horizontal collaboration can be beneficial and sometimes even make a critical contribution to social well-being. After a brief review of the familiar static-efficiency analysis, some of the associated policy issues will be considered briefly. The bulk off the discussion deals with collusion in innovation and its dissemination. Four conclusions of the benefits are drawn. |
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