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Collusion in experimental Bertrand duopolies with convex costs: The role of cost asymmetry

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  • Argenton, Cédric
  • Müller, Wieland

Abstract

Theory, experimental studies, as well as antitrust guidelines suggest that symmetry among firms is conducive to more collusive outcomes. We test this perception in a series of experimental repeated Bertrand duopolies where firms have convex costs. We implement symmetric as well as asymmetric markets that vary in their degree of cost asymmetry among firms. We find no evidence of symmetric markets being more prone to collusion than asymmetric markets. If anything, asymmetry helps firms coordinate on higher prices and achieve higher profits.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 30 (2012)
Issue (Month): 6 ()
Pages: 508-517

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Handle: RePEc:eee:indorg:v:30:y:2012:i:6:p:508-517

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Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords: Bertrand competition; Convex costs; Collusion; Coordination; Experimental economics;

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