Industry structure and collusion with uniform yardstick competition: Theory and experiments

Peter Dijkstra, Marco Haan and Machiel Mulder

International Journal of Industrial Organization, 2017, vol. 50, issue C, 1-33

Abstract: For an industry that is subject to uniform yardstick regulation, we study cartel stability and the impact of cartels on the regulated price. In a theoretical model, an increase in the number of symmetric firms may facilitate collusion. Our laboratory experiment suggests that this effect is even stronger than what theory predicts. Theory predicts that firm-size heterogeneity hinders collusion, but leads to higher regulated prices if firms do not collude. In a laboratory experiment we find that the first effect is stronger, implying that in a more heterogeneous industry regulated prices are lower.

Keywords: Collusion; Industry structure; Yardstick competition; Experiment (search for similar items in EconPapers)
JEL-codes: C73 C92 L13 L51 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:50:y:2017:i:c:p:1-33

DOI: 10.1016/j.ijindorg.2016.10.001

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