Collusion in a Differentiated Market and Environmental Network Externality

We analyse the effect of a “green network externality” in a context of consumers’ environmental sensitiveness and competition between firms in both environmental quality and product prices. In particular, we investigate firms ‘aptitude to implicitly collude on prices in a vertically differentiate market. We find that green network effects hamper collusion. We also find that firms collude if they recognize an adequate value in future joint profits.