Advance Production, Inventories and Market Power: An Experimental Investigation
AbstractThis paper reports an experiment conducted to assess the effects of alterations in production conditions and product durability on market power in Bertrand-Edgeworth duopolies. Experiment results indicate that advance production increases market power in the sense that mean transaction prices increase relative to static Nash equilibrium predictions for a baseline market. In a similar way, a simple inventory option reduces market power. We also find that both advance production and inventory carryover undermine a strong tendency toward tacit collusion observed in our baseline duopoly markets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by VCU School of Business, Department of Economics in its series Working Papers with number 1001.
Length: 27 pages
Date of creation: Feb 2010
Date of revision: Jan 2011
Experiments; Bertrand-Edgeworth Competition; Advance Production; Inventory Carryover;
Other versions of this item:
- Douglas D. Davis, 2013. "Advance Production, Inventories, And Market Power: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 941-958, 01.
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D4 - Microeconomics - - Market Structure and Pricing
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Daniel Cracau & Abdolkarim Sadrieh, 2014. "The Divergent Effects of Long-Term and Short-Term Entry Investments on Home Market Cartels," FEMM Working Papers 140003, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oleg Korenok).
If references are entirely missing, you can add them using this form.