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Two are few and four are many: number effects in experimental oligopolies

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  • Huck, Steffen
  • Normann, Hans-Theo
  • Oechssler, Jorg

Abstract

In this paper we investigate how the competitiveness of Cournot markets varies with the number of firms in an industry. We review previous Cournot experiments in the literature. Additionally, we conduct a new series of experiments studying oligopolies with two, three, four, and five firms in a unified frame. With two firms we find some collusion. Three-firm oligopolies tend to produce outputs at the Nash level. Markets with four or five firms are never collusive and typically settle at or above the Cournot outcome. Some of those markets are actually quite competitive with outputs close to the Walrasian outcome.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 53 (2004)
Issue (Month): 4 (April)
Pages: 435-446

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Handle: RePEc:eee:jeborg:v:53:y:2004:i:4:p:435-446

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  2. Dufwenberg, M. & Gneezy, U., 1998. "Price Competition and Market COncentration: An Experimental Study," Papers, Uppsala - Working Paper Series 1998-08, Uppsala - Working Paper Series.
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  4. Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1998. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," Industrial Organization, EconWPA 9803004, EconWPA.
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