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From imitation to collusion: a replication

Jörg Oechssler, Alex Roomets () and Stefan Roth ()
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Alex Roomets: Franklin and Marshall College
Stefan Roth: Universitat Pompeu Fabra

Journal of the Economic Science Association, 2016, vol. 2, issue 1, 13-21

Abstract: Abstract In oligopoly, imitating the most successful competitor yields very competitive outcomes. This theoretical prediction has been confirmed experimentally by a number of studies. A recent paper by Friedman et al. (J Econ Theory 155:185–205, 2015) qualifies those results in an interesting way: While they replicate the very competitive results for the first 25–50 periods, they show that when using a much longer time horizon of 1200 periods, results slowly turn to more and more collusive outcomes. We replicate their result for duopolies. However, with 4 firms, none of our oligopolies becomes permanently collusive. Instead, the average quantity always stays above the Cournot–Nash equilibrium quantity. Thus, it seems that “four remain many” even with 1200 periods.

Keywords: Imitation; Experiment; Cournot oligopoly; Walrasian outcome (search for similar items in EconPapers)
JEL-codes: C91 C72 D74 (search for similar items in EconPapers)
Date: 2016
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