Geographic Competition and Collusion in Duopoly

Although geographic market divisions by horizontally competitive firms are generally subject to per se condemnation, such presumptive condemnation may be inappropriate in duopoly under specific but reasonable assumptions. This article demonstrates that market division agreements may actually enhance societal surplus under certain market conditions. Incorporating conventional game theory within a geometricspatial analysis, the authors question the propriety of a per se approach to antitrust liability in such situations.