An Experimental Examination of Market Concentration and Capacity Effects on Price Competition
AbstractThis research examines the comparative impact of market concentration and excess capacity on the performance of posted-offer experimental markets. We report the results of panel data analysis of 35 markets with or without excess capacity involving two, three, or four sellers. We find that sellers can sustain higher prices in more concentrated laboratory markets. Higher levels of excess capacity lead to lower laboratory market prices supporting the notion that excess capacity reduces the ability of firms to collude as opposed to the view that excess capacity is a trigger strategy punishment that sustains collusion.
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Bibliographic InfoArticle provided by De Gruyter in its journal Journal of Business Valuation and Economic Loss Analysis.
Volume (Year): 5 (2010)
Issue (Month): 1 (April)
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Web page: http://www.degruyter.com
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