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Experimental Tests of Consciously Parallel Behaviour in Oligopoly

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Author Info
Ronald Harstad (Rutgers University)
Stephen Martin (Institute of Economics, University of Copenhagen)
Hans-Theo Normann (Humboldt Universität zu Berlin)

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Abstract

The purpose of this research is to examine, in experimental oligopoly markets, (a) whether parallel pricing patterns emerge when communication among players is limited to cheap talk announcements; (b) whether such pricing patterns, if they emerge, lead to payoffs that exceed those players would receive in Nash equilibrium of the one-shot game. Results indicate that announcements and price matching lead to margins that exceed those of static Nash equilibrium, while falling short of joint profit maximization.

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File URL: http://www.econ.ku.dk/CIE/Discussion%20Papers/1997/PdfFiles/9707.pdf
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Publisher Info
Paper provided by University of Copenhagen. Department of Economics. Centre for Industrial Economics in its series CIE Discussion Papers with number 1997-07.

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Length: 37 pages
Date of creation: Mar 1997
Date of revision:
Publication status: Published in: Louis Phlips (ed.): Applied Industrial Economics, Cambridge University Press, 1998, 123-151
Handle: RePEc:kud:kuieci:1997-07

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Mason, Charles F. & Phillips, Owen R. & Redington, Douglas B., 1991. "The role of gender in a non-cooperative game," Journal of Economic Behavior & Organization, Elsevier, vol. 15(2), pages 215-235, March. [Downloadable!] (restricted)
  2. Isaac, R. Mark & Ramey, Valerie & Williams, Arlington W., 1984. "The effects of market organization on conspiracies in restraint of trade," Journal of Economic Behavior & Organization, Elsevier, vol. 5(2), pages 191-222, June. [Downloadable!] (restricted)
  3. Basu, Kaushik, 1992. "Collusion in finitely-repeated oligopolies," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 595-609, December. [Downloadable!] (restricted)
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  4. Benson, Bruce L. & Faminow, M. D., 1988. "The impact of experience on prices and profits in experimental duopoly markets," Journal of Economic Behavior & Organization, Elsevier, vol. 9(4), pages 345-365, June. [Downloadable!] (restricted)
  5. Abbink, Klaus & Abdolkarim Sadrieh, 1995. "RatImage - research Assistance Toolbox for Computer-Aided Human Behavior Experiments," Discussion Paper Serie B 325, University of Bonn, Germany.
  6. Harrington, Joseph E, Jr, 1987. "Collusion in Multiproduct Oligopoly Games under a Finite Horizon," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 1-14, February. [Downloadable!] (restricted)
  7. Cason, Timothy N., 1995. "Cheap talk price signaling in laboratory markets," Information Economics and Policy, Elsevier, vol. 7(2), pages 183-204, June. [Downloadable!] (restricted)
  8. Benoit, Jean-Pierre & Krishna, Vijay, 1985. "Finitely Repeated Games," Econometrica, Econometric Society, vol. 53(4), pages 905-22, July. [Downloadable!] (restricted)
  9. Macleod, W. Bentley, 1985. "A theory of conscious parallelism," European Economic Review, Elsevier, vol. 27(1), pages 25-44, February. [Downloadable!] (restricted)
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  10. Brown-Kruse, Jamie & Cronshaw, Mark B & Schenk, David J, 1993. "Theory and Experiments on Spatial Competition," Economic Inquiry, Oxford University Press, vol. 31(1), pages 139-65, January.
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  1. Nikolaos Georgantzis & Aurora García Gallego, 2001. "Adaptive Behavior By Single-Product And Multiproduct Price Setting Firms In Experimental Markets," Working Papers. Serie AD 2001-13, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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