The effects of industry structure and yardstick design on strategic behavior with yardstick competition: an experimental study
AbstractWe present an experiment on yardstick competition. Experimental firms set cost levels in each period and can communicate with each other in an attempt to increase the regulated price. We find that when market shares are heterogeneous, collusion is least frequent and prices are lowest. The number of players on a market also infuences prices, but to a lesser extent. Comparing across yardsticks, the discriminatory yardstick yields the lowest prices, while a best-practice yardstick yields the highest prices.
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Bibliographic InfoPaper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 13008-EEF.
Date of creation: 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
- NEP-COM-2013-07-28 (Industrial Competition)
- NEP-EXP-2013-07-28 (Experimental Economics)
- NEP-REG-2013-07-28 (Regulation)
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- Potters, Jan & Rockenbach, Bettina & Sadrieh, Abdolkarim & van Damme, Eric, 2004.
"Collusion under yardstick competition: an experimental study,"
International Journal of Industrial Organization,
Elsevier, vol. 22(7), pages 1017-1038, September.
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