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COLLUSION AND FIGHTS IN AN EXPERIMENT WITH PRICE-SETTING FIRMS AND ADVANCE PRODUCTION -super-*

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  • JORDI BRANDTS
  • PABLO GUILLEN

Abstract

We present results from 50-round duopoly and triopoly experiments. Firms decide repeatedly both on price and quantity of a perishable good. Each firm has capacity to serve the whole market. The stage game does not have an equilibrium in pure strategies. Most markets evolve either to monopolies as a consequence of bankruptcies or to collusion at the monopolistic price. Evolution is faster in markets with two than in those with three firms. Therefore, over time average price is lower with three than with two. Consumer surplus is higher with three firms, but efficiency is lower in markets with three firms. Copyright 2007 Blackwell Publishing Ltd..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 55 (2007)
Issue (Month): 3 (09)
Pages: 453-473

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Handle: RePEc:bla:jindec:v:55:y:2007:i:3:p:453-473

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Tong Zhang & B. Brorsen, 2011. "Oligopoly firms with quantity-price strategic decisions," Journal of Economic Interaction and Coordination, Springer, vol. 6(2), pages 157-170, November.
  2. Tibor Neugebauer & Sascha Fllbrunn, 2013. "Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game," LSF Research Working Paper Series 13-10, Luxembourg School of Finance, University of Luxembourg.

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