Collusion and Fights in an Experiment with Price-Setting Firms and Production in Advance

Jordi Brandts and Pablo Guill?
Authors registered in the RePEc Author Service: Pablo Guillen

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We present results from 50-round market experiments in which firms decide repeatedly both on price and quantity of a completely perishable good. Each firm has capacity to serve the whole market. The stage game does not have an equilibrium in pure strategies. We run experiments for markets with two and three identical firms. Firms tend to cooperate to avoid fights, but when they fight bankruptcies are rather frequent. On average, pricing behavior is closer to that for pure quantity than for pure price competition and price and efficiency levels are higher for two than for three firms. Consumer surplus increases with the number of firms, but unsold production leads to higher efficiency losses with more firms. Over time prices tend to the highest possible one for markets both with two and three firms.

Keywords: Experiments; Oligopoly; Collusion (search for similar items in EconPapers)
JEL-codes: C91 D43 (search for similar items in EconPapers)
Pages: 39
Date: 2004-07-15
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Collusion and Fights in an Experiment with Price-Setting Firms and Production in Advance (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:618.04

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