Distinguishable Patterns of Competition, Collusion, and Parallel Action
AbstractAlternative market structures are distinguishable by the degree of parallel action exhibited by producers. We show that the correlation between output levels varies systematically with the degree of interdependence among firms, and establish an ordering among alternative behavioral hypotheses (Cournot, Stackelberg, Edgeworth/Bertrand, collusion, and perfect competition). Because the ordering is invariant to the values of background parameters, statistical tests of market conduct may be possible even when the slopes of the demand curve and marginal cost curves are unknown. An application to the world oil market finds strong evidence of collusive behavior among OPEC members, but not elsewhere.
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Bibliographic InfoPaper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0306.
Date of creation: May 2003
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