Price collusion in duopoly markets leads to increased government subsidies for firms.
The article explores how companies working together to set prices in a market with different products can impact government policies. The researchers found that when firms collude on prices, the government tends to give them subsidies, especially when products are very different from each other. This means that companies can influence the government to support them financially by working together on pricing. The study shows that under collusion, firms are more likely to receive subsidies compared to when they compete against each other.