This is a paper that focuses on the characteristics that affect the likelihood of collusion discussion. The paper also provides additional instructions to use in answering the paper.

Characteristics that affect the likelihood of collusion discussion

Answer TWO out of the following FIVE questions
Write no more than 750 words per question. Total word limit 1,500 words
Do not use footnotes or appendices. If you wish, you may include a list of references at the end which are not included in the word count, but this is not necessary.
You may include diagrams and equations in your answer

1. Firstly, discuss how the following characteristics affect the likelihood of collusion. Include real-world examples in your answer.
i) A small number of firms in the industry, combined with high barriers to entry;
ii) Multi-market contact.

2. Secondly, explain the following forms of price discrimination used in train travel, and describe how they affect consumer welfare:
i) Student discounts on rail tickets;
ii) First-class and standard-class seats on a train.

3. i) Thirdly, explain how exclusive territories contracts can have positive effects on consumer welfare.
ii) Explain the ‘double marginalisation’ problem. Might the use of exclusive territories in car sales cause this problem in practice?

4. Fourthly, explain the Aghion et al. (2005) ‘inverted U’ model of the relationship between product market competition and also innovation. Discuss whether this model is supported by empirical evidence.

5. Additionally, explain how problems of excess inertia and excess momentum can occur when consumers face the decision of switching from an old technology such as the DVD player, to a new technology such as Blu-ray. How might ‘backwards compatibility’, i.e. the ability to play DVDs on a Blu-ray player, affect consumers’ decisions on whether to switch to the new technology?

Instructions
You should choose TWO of the following five questions
You should write a maximum of 750 words for each question
The total word count should be a maximum of 1,500 words (excluding the questions and any list of references).
Assignments must be submitted through the online submission point on Blackboard
Your assignment will be checked for plagiarism through TurnItIn
You should attach the standard coversheet (available on Blackboard) to your assignment before submission. You should include your student number but not your name.

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