Estimating Dynamic Games of Oligopolistic Competition: An Experimental Investigation

Tobias Salz and Emanuel Vespa

No 26765, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We evaluate dynamic oligopoly estimators with laboratory data. Using a stylized en-try/exit game, we estimate structural parameters under the assumption that the data are generated by a Markov-perfect equilibrium (MPE) and use the estimates to predict counterfactual behavior. The concern is that if the Markov assumption was violated one would mispredict counterfactual outcomes. The experimental method allows us to compare predicted behavior for counterfactuals to true counterfactuals implemented as treatments. Our main finding is that counterfactual prediction errors due to collusion are in most cases only modest in size.

JEL-codes: L10 L13 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
Note: IO
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Citations: View citations in EconPapers (6)

Published as Tobias Salz & Emanuel Vespa, 2020. "Estimating dynamic games of oligopolistic competition: an experimental investigation," The RAND Journal of Economics, vol 51(2), pages 447-469.

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Journal Article: Estimating dynamic games of oligopolistic competition: an experimental investigation (2020)
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