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Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?

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  • Huck, Steffen
  • Normann, Hans-Theo
  • Oechssler, Jorg

Abstract

This paper investigates the impact of information about rivals' actions on the competitiveness of experimental oligopoly markets. We compare two treatments: in one, firms are informed about their rivals' actions and profits. In the other, firms are only given some aggregate information about their rivals' actions (aggregate quantities, average price). We find that in markets where goods are strategic substitutes (Cournot) the first, full information treatment leads to a significantly higher degree of competition. This is in contrast to conventional wisdom in IO. However, in markets with strategic complements (Bertrand), we find no significant difference between the two treatments.
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  • Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2000. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 39-57, January.
  • Handle: RePEc:eee:indorg:v:18:y:2000:i:1:p:39-57
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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