The impact of forward contracting on tacit collusion: Experimental evidence

Jens Schubert

Journal of Economic Behavior & Organization, 2015, vol. 119, issue C, 109-123

Abstract: This article reports the results of a laboratory experiment designed to examine the strategic impact of forward contracting on market power in infinitely repeated duopolies. Theory predicts that forward contracting can not only increase the likelihood of collusion but can also serve as a credible commitment device that minimizes firms’ incentives to deviate from collusion. Focusing on strategic choices, the experimental design investigates the impact of forward contracting on collusion and contrasts it to the effect of adding one additional competitor. While the findings do not provide evidence that a forward market results in more collusion, the findings suggest that forward contracting can reinforce collusion when firms tacitly collude.

Keywords: Cournot oligopoly; Collusion; Experiments; Forward contracting; Stackelberg (search for similar items in EconPapers)
JEL-codes: C72 C91 D43 L13 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268115002073
Full text for ScienceDirect subscribers only

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: https://EconPapers.repec.org/RePEc:eee:jeborg:v:119:y:2015:i:c:p:109-123

DOI: 10.1016/j.jebo.2015.07.016

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().