Possible Collusion and Equilibrium Prices

Tom-Reiel Heggedal, Knutsen, Magus VÃ¥ge and Espen Rasmus Moen

No 19817, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We investigate how possible collusion, interpreted as a positive prior probability that collusion may occur, influences equilibrium prices in states of the world in which collusion, in fact, does not occur. We explore the mechanism in a theoretical model of consumer search, based on the Stahl (1989) framework, and show that with possible collusion, equilibrium prices are higher even in the absence of collusion. We test the model predictions in a series of laboratory experiments. The results are qualitatively consistent with our theoretical predictions.

JEL-codes: D82 D83 L13 (search for similar items in EconPapers)
Date: 2024-12
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP19817 (application/pdf)

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:cpr:ceprdp:19817

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP19817

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().