Econometric Analysis of Collusive Behavior in a Soft-Drink Market
Jean-Jacques Laffont and
Journal of Economics & Management Strategy, 1992, vol. 1, issue 2, pages 277-311
This paper proposes an empirical methodology for studying various (implicit or explicit) collusive behavior on two strategic variables, which are price and advertising, in a differentiated market dominated by a duopoly. In addition to Nash or Stackelberg behaviors, we consider collusion on both variables, collusion on one variable and competition on the other, etc. Using data on the Coca-Cola and Pepsi-Cola markets from 1968 to 1986, full information maximum likelihood estimation of cost and demand functions are obtained allowing for various collusive behaviors. The collusive hypothesis is not rejected, and the best form of collusive behavior is selected via nonnested testing procedures. Using the best model, Lerner indices are computed for both duopolists to provide summary measures of market power. Finally, our approach is contrasted with the conjectural variation approach and is shown to give superior results. Copyright 1992 by MIT Press.
References: Add references at CitEc
Citations View citations in EconPapers (111) Track citations by RSS feed
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Working Paper: Econometric Analysis of Collusive Behavior in a Soft Drink Market (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:bla:jemstr:v:1:y:1992:i:2:p:277-311
Ordering information: This journal article can be ordered from
http://www.blackwell ... ref=1058-6407&site=1
Access Statistics for this article
Journal of Economics & Management Strategy is currently edited by Summer
More articles in Journal of Economics & Management Strategy from Wiley Blackwell
Series data maintained by Wiley-Blackwell Digital Licensing ().