Collusion through price ceilings? In search of a focal-point effect

Dirk Engelmann and Wieland Müller

Journal of Economic Behavior & Organization, 2011, vol. 79, issue 3, 291-302

Abstract: Abstract We resume the search for a collusive focal-point effect of price ceilings in laboratory markets. We argue that market conditions in previous studies were unfavorable for collusion which may have been responsible for not finding such a focal-point effect. Our design aims at maximizing the likelihood of a focal-point effect. Nevertheless, our results again fail to support the focal-point hypothesis. Collusion is as unlikely in markets with a price ceiling as in markets with unconstrained pricing. Overall, static Nash equilibrium predicts the data fairly accurately. We argue this might warrant re-interpretation of field studies on anti-competitive effects of price ceilings.

Keywords: Collusion; Competition; policy; Experimental; economics; Focal; point (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:79:y:2011:i:3:p:291-302

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