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Conspiracies and secret price discounts in the marketplace: Evidence from field experiments

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  • John List
  • Michael Price

Abstract

We 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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File URL: http://karlan.yale.edu/fieldexperiments/papers/00115.pdf
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Bibliographic Info

Paper provided by The Field Experiments Website in its series Framed Field Experiments with number 00115.

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Date of creation: 2005
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Handle: RePEc:feb:framed:00115

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Web page: http://www.fieldexperiments.com

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Cited by:
  1. Al-Ubaydli, Omar & Boettke, Peter, 2010. "Markets as economizers of information: Field experimental examination of the “Hayek Hypothesis”," MPRA Paper 27660, University Library of Munich, Germany.
  2. Steven D. Levitt & John A. List, 2008. "Field Experiments in Economics: The Past, The Present, and The Future," NBER Working Papers 14356, National Bureau of Economic Research, Inc.
  3. John List, 2013. "Using field experiments to change the template of how we teach economics," Artefactual Field Experiments 00389, The Field Experiments Website.
  4. Jeffery Flory & Uri Gneezy & Kenneth Leonard & John List, 2012. "Sex, competitiveness, and investment in offspring: On the origin of preferences," Artefactual Field Experiments 00072, The Field Experiments Website.
  5. Jonathan E. Alevy & Michael K. Price, 2012. "Advice and Fictive Learning: The Pricing of Assets in the Laboratory," Working Papers 2012-07, University of Alaska Anchorage, Department of Economics.

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