Douglas D. Davis () (Department of Economics, VCU School of Business) Korenok Oleg () (Department of Economics, VCU School of Business) Robert Reilly () (Department of Economics, VCU School of Business)
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We study the effects of price signaling activity and underlying propensities to cooperate on tacit collusion in posted offer markets. The primary experiment consists of an extensively repeated baseline sequence and a 'forecast' sequence that adds to the baseline a forecasting game that allows identification of signaling intentions. Forecast sequence results indicate that signaling intentions considerably exceed those that are counted under a standard signal measure based on previous period prices. Nevertheless, we find essentially no correlation between either measure of signal volumes and collusive efficiency. A second experiment demonstrates that underlying seller propensities to cooperate more clearly affect collusiveness.
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Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number
0702.