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A Classroom Experiment On Oligopolies

Author

Listed:
  • Nelson, Robert G.
  • Beil, Richard O., Jr.

Abstract

This experiment demonstrates principles of decision-making in dynamic oligopolies, especially the difficulties in forming and maintaining cartels. As an illustration of firm behavior under imperfect competition, the game distinguishes between procedurally rational choices and substantively rational decisions in the context of collusive, Cournot, and competitive equilibria. The paper discusses results from an actual classroom exercise and suggests some additional variations in institutional details. Instructions for students and a spreadsheet program for producing payoff tables are provided in the appendices.

Suggested Citation

  • Nelson, Robert G. & Beil, Richard O., Jr., 1995. "A Classroom Experiment On Oligopolies," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(01), July.
  • Handle: RePEc:ags:joaaec:15353
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    File URL: http://purl.umn.edu/15353
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    References listed on IDEAS

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    1. James W. Friedman, 1965. "An Experimental Study of Cooperative Duopoly," Cowles Foundation Discussion Papers 192, Cowles Foundation for Research in Economics, Yale University.
    2. Friedman,Daniel & Sunder,Shyam, 1994. "Experimental Methods," Cambridge Books, Cambridge University Press, number 9780521456821.
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    Cited by:

    1. Correa, Manuel & GarcĂ­a-Quero, Fernando & Ortega-Ortega, Marta, 2016. "A role-play to explain cartel behavior: Discussing the oligopolistic market," International Review of Economics Education, Elsevier, vol. 22(C), pages 8-15.

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