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Price dynamics and collusion under short-run price commitments

  • Leufkens Kasper
  • Peeters Ronald

    (METEOR)

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.

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File URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:0729df4b-9631-4122-940e-820a429be42a/datastreams/ASSET1/content
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Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 052.

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Date of creation: 2008
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Handle: RePEc:unm:umamet:2008052
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