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How Much Collusion? A Meta-Analysis Of Oligopoly Experiments

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  • Christoph Engel

Abstract

Oligopoly has been among the first topics in experimental economics. Over half a century, some 150 papers have been published. Each individual paper was interested in demonstrating one effect, but in order to do so, experimenters had to specify many more parameters. Thus they have generated a huge body of evidence, untapped so far. This meta-analysis makes this evidence available. More than 100 of the papers lend themselves to calculating an index of collusion. The database behind this paper covers some 500 different settings. The experimental results may be normalized as a percentage of the span between the Walrasian and the Pareto outcomes. In the same way, results may be expressed as a percentage of the distance between the Nash and the Pareto outcomes. For each and every one of the parameters, these two indices make it possible to answer two questions: How far is the market outcome away from the competitive equilibrium? And how good is the Nash prediction? Most importantly, however, the meta-analysis sheds light on how features of the experimental setting interact with each other. Most main effects and many interaction effects are indeed statistically significant.

Suggested Citation

  • Christoph Engel, 2007. "How Much Collusion? A Meta-Analysis Of Oligopoly Experiments," Journal of Competition Law and Economics, Oxford University Press, vol. 3(4), pages 491-549.
    • Handle: RePEc:oup:jcomle:v:3:y:2007:i:4:p:491-549.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhm016
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    References listed on IDEAS

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    2. Allen, Beth & Hellwig, Martin, 1986. "Price-Setting Firms and the Oligopolistic Foundations of Perfect Competition," American Economic Review, American Economic Association, vol. 76(2), pages 387-392, May.
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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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