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Information Sharing and Tacit Collusion in Laboratory Duopoly Markets

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  • Cason, Timothy N
  • Mason, Charles F

Abstract

This paper reports forty-five laboratory duopoly markets that examine the importance of information sharing in facilitating tacit collusion under conditions of demand uncertainty. Sellers in these repeated laboratory markets generally shared information when possible to reduce their demand uncertainty, which led to output reductions in some demand states. Risk aversion is a likely explanation for this sharing but some sellers also appeared to employ a strategy of information concealment to punish noncolluding rivals. Nevertheless, output choices were similar in control treatments that forced sellers to share or conceal information, so the information sharing itself did not substantially increase tacit collusion. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Cason, Timothy N & Mason, Charles F, 1999. "Information Sharing and Tacit Collusion in Laboratory Duopoly Markets," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 258-281, April.
    • Handle: RePEc:oup:ecinqu:v:37:y:1999:i:2:p:258-81
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    Citations

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    Cited by:

    1. Suetens, Sigrid, 2008. "Does R&D cooperation facilitate price collusion? An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 822-836, June.
    2. Eddy Cardinaels & Filip Roodhooft & Luk Warlop & Gustaaf Van Herck, 2008. "Competitive Pricing in Markets with Different Overhead Costs: Concealment or Leakage of Cost Information?," Journal of Accounting Research, Wiley Blackwell, vol. 46(4), pages 761-784, September.
    3. Chang, Chun-Hao & Prakash, Arun J. & Yeh, Shu, 2004. "Sale of monopoly information and behavior of rivaling clients: A theoretical perspective," Review of Financial Economics, Elsevier, vol. 13(3), pages 283-304.
    4. Krämer Jan & Vogelsang Ingo, 2016. "Co-Investments and Tacit Collusion in Regulated Network Industries: Experimental Evidence," Review of Network Economics, De Gruyter, vol. 15(1), pages 35-61, March.
    5. Timothy L. Sorenson, 2002. "Theory And Practice In The Classroom: A Repeated Game Of Multimarket Oligopoly," Contemporary Economic Policy, Western Economic Association International, vol. 20(3), pages 316-329, July.
    6. Robert Feinberg & Christopher Snyder, 2002. "Collusion with secret price cuts: an experimental investigation," Economics Bulletin, AccessEcon, vol. 3(6), pages 1-11.
    7. Chun‐Hao Chang & Arun J. Prakash & Shu Yeh, 2004. "Sale of monopoly information and behavior of rivaling clients: A theoretical perspective," Review of Financial Economics, John Wiley & Sons, vol. 13(3), pages 283-304.
    8. Kubler, Dorothea & Muller, Wieland, 2002. "Simultaneous and sequential price competition in heterogeneous duopoly markets: experimental evidence," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1437-1460, December.
    9. Liliane Karlinger, 2008. "How Demand Information Can Destabilize a Cartel," Vienna Economics Papers 0803, University of Vienna, Department of Economics.
    10. Liliane Karlinger, 2008. "How Demand Information Can Destabilize a Cartel," Vienna Economics Papers vie0803, University of Vienna, Department of Economics.
    11. Kazunori Miwa, 2013. "The Impact of Mandatory Disclosure on Information Acquisition: Theory and Experiment," Discussion Papers in Economics and Business 13-01, Osaka University, Graduate School of Economics.
    12. Dollinger, Jérôme & Mauleon, Ana & Vannetelbosch, Vincent, 2023. "R&D and Market Sharing Agreements," LIDAM Discussion Papers CORE 2023004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Dechenaux, Emmanuel & Mago, Shakun D., 2019. "Communication and side payments in a duopoly with private costs: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 157-184.
    14. Till Requate & Israel Waichman, 2011. "“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 36-46, March.
    15. Charles F. Mason & Owen R. Phillips, 2002. "In Support of Trigger Strategies: Experimental Evidence from Two‐Person Noncooperative Games," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(4), pages 685-716, December.
    16. repec:ebl:ecbull:v:3:y:2002:i:6:p:1-11 is not listed on IDEAS
    17. David Kopanyi & Anita Kopanyi-Peuker, 2015. "Endogenous information disclosure in experimental oligopolies," Discussion Papers 2015-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    18. Kazunori Miwa, 2021. "An Experimental Study on Information Acquisition and Disclosure in a Cournot Duopoly Market," Discussion Papers in Economics and Business 13-01-Rev, Osaka University, Graduate School of Economics.
    19. Hemant Bhargava & Antoine Dubus & David Ronayne & Shiva Shekhar, 2024. "The Strategic Value of Data Sharing in Interdependent Markets," CESifo Working Paper Series 10963, CESifo.
    20. John A. List, 2009. "The Economics of Open Air Markets," NBER Working Papers 15420, National Bureau of Economic Research, Inc.

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