Endogenous Communication and Tacit Coordination in Market Entry Games - An explorative experimental study
AbstractThis paper explores experimentally the effects of costly communication possibilities in market entry games. It is shown that these effects depend on whether entry costs are symmetric or asymmetric. In the former, but not the latter case, communication possibilities increase coordination success substantially and are likely to generate inferior outcomes for consumers. Furthermore, cost asymmetries provide a tacit coordination cue that is robust to changes in the game and is used by experienced players as a substitute to communication. It is also shown that although communication opens up for aggressive market domination strategies, such strategies are not used often successful.
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Bibliographic InfoPaper provided by Lund University, Department of Economics in its series Working Papers with number 2006:12.
Length: 47 pages
Date of creation: 03 May 2006
Date of revision:
Publication status: Published in International Journal of Industrial Organization, 2010, pages 477-495.
Contact details of provider:
Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/en
More information through EDIRC
Communication; Market Entry; Coordination;
Other versions of this item:
- Andersson, Ola & Holm, Håkan J., 2010. "Endogenous communication and tacit coordination in market entry games: An explorative experimental study," International Journal of Industrial Organization, Elsevier, vol. 28(5), pages 477-495, September.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-05-13 (All new papers)
- NEP-COM-2006-05-13 (Industrial Competition)
- NEP-EXP-2006-05-13 (Experimental Economics)
- NEP-GTH-2006-05-13 (Game Theory)
- NEP-LAW-2006-05-13 (Law & Economics)
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