Collusion and Fights in an Experiment with Price-Setting Firms and Production in Advance

Jordi Brandts () and Guill?, Pablo
Additional contact information
Jordi Brandts: http://www.iae.csic.es
Authors registered in the RePEc Author Service: Pablo Guillén ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We present results from 50-round market experiments in which firms decide repeatedly both on price and quantity of a completely perishable good. Each firm has capacity to serve the whole market. The stage game does not have an equilibrium in pure strategies. We run experiments for markets with two and three identical firms. Firms tend to cooperate to avoid fights, but when they fight bankruptcies are rather frequent. On average, pricing behavior is closer to that for pure quantity than for pure price competition and price and efficiency levels are higher for two than for three firms. Consumer surplus increases with the number of firms, but unsold production leads to higher efficiency losses with more firms. Over time prices tend to the highest possible one for markets both with two and three firms.

Keywords: Experiments; Oligopoly; Collusion (search for similar items in EconPapers)
JEL-codes: D43 C91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Date: 2004-07-15
View list of references View citations in EconPapers

Downloads: (external link)
http://pareto.uab.es/wp/2004/61804.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:aub:autbar:618.04

Access Statistics for this paper

More papers in UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)
Contact information at EDIRC.
Series data maintained by Xavier Vila ().