Multimarket contacts with trade costs and distance cost

Abstract

This paper presents a critical comparison of the four major papers on territorial allocation by Bernheim and Whinston, Lommerud and Sorgard, Schroder, and Bhattacharjea and Sinha. The paper adds a new dimension to the analysis as it also studies the impact of a change in distance on collusion and establishes the distance paradox which states that collusion is facilitated with a unit fall in the distance