Interfirm Rivalry in a Repeated Game: An Empirical Test of Tacit Collusion

Margaret Slade ()

Journal of Industrial Economics, 1987, vol. 35, issue 4, 499-516

Abstract: Rivalry in the Vancouver retail gasoline market is modeled as a repeated game. Service-station demand, cost, and intertemporal reaction functions are estimated from daily data on individual station prices, costs, and sales. These functions are then used to calculate noncooperative and cooperative solutions to the constitutent game and the actual outcome of the repeated game. The actual outcome is found to be substantially less lucrative than the monopoly solution. Nevertheless, all stations are better off than if they played their noncooperative strategies in every period. Copyright 1987 by Blackwell Publishing Ltd.

Date: 1987
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