Experimental Tests of Consciously Parallel Behaviour in Oligopoly

Ronald M. Harstad (), Stephen Martin () and Hans-Theo Normann ()

No 1997-07, CIE Discussion Papers from University of Copenhagen. Department of Economics. Centre for Industrial Economics

Abstract: The purpose of this research is to examine, in experimental oligopoly markets, (a) whether parallel pricing patterns emerge when communication among players is limited to cheap talk announcements; (b) whether such pricing patterns, if they emerge, lead to payoffs that exceed those players would receive in Nash equilibrium of the one-shot game. Results indicate that announcements and price matching lead to margins that exceed those of static Nash equilibrium, while falling short of joint profit maximization.

Date: 1997-03
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Published in: Louis Phlips (ed.): Applied Industrial Economics, Cambridge University Press, 1998, 123-151

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