Conspiracies and secret price discounts in the marketplace: Evidence from field experiments
AbstractWe explore collusion by using the tools of experimental economics in a naturally occurring marketplace. We report that competitive price theory adequately organizes data in multilateral decentralized bargaining markets without conspiratorial opportunities. When conspiratorial opportunities are allowed and contract prices are perfectly observed, prices (quantities) are considerably above (below) competitive levels. When sellers receive imperfect price signals, outcomes are intermediate to those of competitive markets and collusive markets with full information. Finally, experienced buyers serve as a catalyst to thwart attempts by sellers to engage in anticompetitive pricing: in periods where experienced agents transact in the market, average transaction prices are below those realized in periods where only inexperienced agents execute trades.
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Bibliographic InfoPaper provided by The Field Experiments Website in its series Framed Field Experiments with number 00115.
Date of creation: 2005
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- John A. List & Michael K. Price, 2005. "Conspiraces and Secret Price Discounts in the Marketplace: Evidence from Field Experiments," RAND Journal of Economics, The RAND Corporation, vol. 36(3), pages 700-717, Autumn.
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