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Firm-Specific Information and Explicit Collusion in Experimental Oligopolies

Author

Listed:
  • Francisco Gomez-Martin

    (University of Amsterdam, the Netherlands)

  • Sander Onderstal

    (University of Amsterdam, the Netherlands)

  • Joep Sonnemans

    (University of Amsterdam, the Netherlands)

Abstract

Published in the 'European Economic Review' . We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: Markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.

Suggested Citation

  • Francisco Gomez-Martin & Sander Onderstal & Joep Sonnemans, 2015. "Firm-Specific Information and Explicit Collusion in Experimental Oligopolies," Tinbergen Institute Discussion Papers 15-054/I, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20150054
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    File URL: http://papers.tinbergen.nl/15054.pdf
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    References listed on IDEAS

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    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Fourberg, Niklas, 2018. "Let's lock them in: Collusion under consumer switching costs," DICE Discussion Papers 296, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Gomez-Martinez, Francisco, 2017. "Partial Cartels and Mergers with Heterogenous Firms: Experimental Evidence," EconStor Preprints 169380, ZBW - Leibniz Information Centre for Economics.
    3. repec:kap:expeco:v:20:y:2017:i:4:d:10.1007_s10683-017-9517-4 is not listed on IDEAS
    4. Gomez-Martinez, Francisco, 2016. "Partial Cartels and Mergers with Heterogeneous Firms: Experimental Evidence," MPRA Paper 81132, University Library of Munich, Germany, revised 01 Jul 2017.
    5. Lenka Fiala & Sigrid Suetens, 2017. "Transparency and cooperation in repeated dilemma games: a meta study," Experimental Economics, Springer;Economic Science Association, vol. 20(4), pages 755-771, December.
    6. Fonseca, Miguel A. & Li, Yan & Normann, Hans-Theo, 2018. "Why factors facilitating collusion may not predict cartel occurrence: Experimental evidence," DICE Discussion Papers 289, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. 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.

    More about this item

    Keywords

    Cournot oligopoly; Cartels; Information; Experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • 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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