Price Competition with Differentiated Products on a Two-Dimensional Plane: The Impact of Partial Cartel on Firms’ Profits and Behavior

A numerical procedure capable of obtaining the equilibrium states oligopoly markets under several assumptions is presented. Horizontal and vertical product differentiation were included by taking into account Euclidean distance in a two-dimensional space quality characteristics product. Different preferences consumers model. Firms implement two strategies market: profit maximization market share maximization. Numerical discretization area was performed for computing prices which allows one to consider any location firms. Four scenarios developed combining both from side competitive behavior partial cartel agreement another side. The main differences between are outlined. Profits, shares presented compared. influence collusion, existence participants with strategy consumer on firm’s profits examined. Cases whereby firms prefer leave investigated. Best locations setting new store shown discussed.