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How Much Collusion. A Meta-Analysis On Oligopoly Experiments

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  • Christoph Engel

    ()
    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

Oligopoly has been among the first topics in the experimental economics. Over half a century, some 150 papers have been published. Each individual paper was interested in demonstrating one effect. But in order to do so, experimenters had to specify many more parameters. That way they have generated a huge body of evidence, untapped thus far. This meta-analysis makes this evidence available. More than 100 of the papers lend themselves to calculating an index of collusion. The data bank behind this paper covers some 700 different settings. The experimental results may be normalised as a percentage of the span between the Walrasian and the Pareto outcomes. The same way, results may be expressed as a percentage of the distance between the Nash and the Pareto outcomes. For each and every of the parameters, these two indices make it possible to answer two questions: how far is the market outcome away from the competitive equilibrium? And how good is the Nash prediction? Most importantly, however, the meta-analysis sheds light on how features of the experimental setting interact with each other. Most main effects and many interaction effects are indeed statistically significant.

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Bibliographic Info

Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2006_27.

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Length: 62 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:mpg:wpaper:2006_27

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Keywords: oligopoly; collusion; unilateral effect; experiment;

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Citations

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Cited by:
  1. Douglas D. Davis & Korenok Oleg & Robert Reilly, 2007. "Re-matching, Information and Sequencing Effects in Posted Offer Markets," Working Papers 0701, VCU School of Business, Department of Economics, revised Oct 2007.
  2. Christoph Engel & Lilia Zhurakhovska, 2012. "Harm on an Innocent Outsider as a Lubricant of Cooperation – An Experiment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2012_02, Max Planck Institute for Research on Collective Goods.
  3. Andreas Nicklisch, 2008. "Semi-collusive advertising and pricing in experimental duopolies," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_25, Max Planck Institute for Research on Collective Goods.
  4. Christoph Engel & Lilia Zhurakhovska, 2011. "Oligopoly as a Socially Embedded Dilemma. An Experiment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2011_01, Max Planck Institute for Research on Collective Goods.
  5. Doruk Iris & Luís Santos-Pinto, 2008. "Tacit Collusion under Fairness and Reciprocity," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 09.03, Université de Lausanne, Faculté des HEC, DEEP.
  6. Ottone, Stefania & Ponzano, Ferruccio, 2010. "Competition and cooperation in markets. The experimental case of a winner-take-all setting," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 163-170, April.
  7. Christoph Engel & Bettina Rockenbach, 2009. "We Are Not Alone: The Impact of Externalities on Public Good Provision," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_29, Max Planck Institute for Research on Collective Goods, revised May 2011.
  8. Joseph E. Harrington, Jr., 2012. "A Theory of Tacit Collusion," Economics Working Paper Archive 588, The Johns Hopkins University,Department of Economics.
  9. Nicholas Wilson, 2012. "Shock to the System: Prevention of Mother-to-Child Transmission of HIV and Child Mortality," Department of Economics Working Papers 2012-03, Department of Economics, Williams College, revised Jul 2013.
  10. Argenton, Cédric & Müller, Wieland, 2012. "Collusion in experimental Bertrand duopolies with convex costs: The role of cost asymmetry," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 508-517.
  11. Daniel Cracau & Benjamin Franz, 2012. "An experimental study of mixed strategy equilibria in simultaneous price-quantity games," FEMM Working Papers 120017, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  12. Christoph Engel, 2010. "Dictator Games: A Meta Study," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_07, Max Planck Institute for Research on Collective Goods, revised Jan 2011.
  13. Lisa Anderson & Beth Freeborn & Jason Hulbert, 2012. "Risk Aversion and Tacit Collusion in a Bertrand Duopoly Experiment," Review of Industrial Organization, Springer, vol. 40(1), pages 37-50, February.
  14. Schubert, Jens, 2013. "The Impact of Forward Trading on Tacit Collusion: Experimental Evidence," MPRA Paper 43768, University Library of Munich, Germany.
  15. Joseph E. Harrington, Jr., 2012. "Evaluating Mergers for Coordinated Effects and the Role of 'Parallel Accommodating Conduct'," Economics Working Paper Archive 601, The Johns Hopkins University,Department of Economics.
  16. Davis, Douglas, 2011. "Behavioral convergence properties of Cournot and Bertrand markets: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 443-458.
  17. Duersch, Peter & Eife, Thomas, 2013. "Price Competition in an Inflationary Environment," Working Papers 0547, University of Heidelberg, Department of Economics.
  18. Krämer, Jan & Vogelsang, Ingo, 2012. "Co-investments and tacit collusion in regulated network industries: Experimental evidence," 23rd European Regional ITS Conference, Vienna 2012 60389, International Telecommunications Society (ITS).

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