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Tacit Collusion in Price-Setting Duopoly Markets: Experimental Evidence with Complements and Substitutes

Author

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  • Lisa R. Anderson

    () (Department of Economics, College of William and Mary, Williamsburg, VA 23187, USA)

  • Beth A. Freeborn

    () (Department of Economics, College of William and Mary, Williamsburg, VA 23187, USA)

  • Charles A. Holt

    () (Department of Economics, University of Virginia, Charlottesville, VA 22904, USA)

Abstract

We study the effect of demand structure on the ability of subjects to tacitly collude on prices by considering Bertrand substitutes and Bertrand complements. We find evidence of collusion in the complements treatment, but no such evidence is found in the substitutes treatment. This finding is somewhat in contrast with a previous study that observes tacit collusion in two treatments with similar underlying demand structures but with no market framing.

Suggested Citation

  • Lisa R. Anderson & Beth A. Freeborn & Charles A. Holt, 2010. "Tacit Collusion in Price-Setting Duopoly Markets: Experimental Evidence with Complements and Substitutes," Southern Economic Journal, Southern Economic Association, vol. 76(3), pages 577-591, January.
  • Handle: RePEc:sej:ancoec:v:76:3:y:2010:p:577-591
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    File URL: http://dx.doi.org/10.4284/sej.2010.76.3.577
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    Cited by:

    1. Lisa Anderson & Beth Freeborn & Jason Hulbert, 2012. "Risk Aversion and Tacit Collusion in a Bertrand Duopoly Experiment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(1), pages 37-50, February.

    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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