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Price dynamics and collusion under short-run price commitments

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  • Leufkens Kasper
  • Peeters Ronald

    (METEOR)

Abstract

We consider a dynamic homogenous oligopoly in which firms set prices repeatedly. Theory predicts that short-run price commitments have an increasing impact on profits and may lead to less price stability. The experiments that we conduct provide support for the first effect and against the second effect when a random ending rule is applied. Application of a fixed ending rule seems to reverse these findings, but none of the effects is significant.

Suggested Citation

  • Leufkens Kasper & Peeters Ronald, 2008. "Price dynamics and collusion under short-run price commitments," Research Memorandum 052, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  • Handle: RePEc:unm:umamet:2008052
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    References listed on IDEAS

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    Cited by:

    1. Philippe Gillen & Alexander Rasch & Achim Wambach & Peter Werner, 2016. "Bid pooling in reverse multi-unit Dutch auctions: an experimental investigation," Theory and Decision, Springer, vol. 81(4), pages 511-534, November.
    2. Charalambos Christou, 2015. "A model of dynamic competition with sticky prices," Discussion Paper Series 2015_05, Department of Economics, University of Macedonia, revised Nov 2015.
    3. Bruttel, Lisa & Fischbacher, Urs, 2013. "Taking the initiative. What characterizes leaders?," European Economic Review, Elsevier, vol. 64(C), pages 147-168.

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