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Capacity choices and price competition in experimental markets

  • Anderhub, Vital
  • Güth, Werner
  • Kamecke, Ulrich
  • Normann, Hans-Theo

In the heterogeneous experimental oligopoly markets of this paper, sellers first choose capacities and then prices. In equilibrium, capacities should correspond to the Cournot prediction. In the experimental data, given capacities, observed price setting behavior is in general consistent with the theory. Capacities converge above the Cournot level. Sellers rarely manage to cooperate.

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Paper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2001,10.

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Date of creation: 2001
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Handle: RePEc:zbw:sfb373:200110
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  1. Stephen Martin, 1999. "Kreps And Scheinkman With Product Differentiation: An Expository Note," CIE Discussion Papers 1999-11, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  2. Davis, Douglas D., 1999. "Advance production and Cournot outcomes: an experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 40(1), pages 59-79, September.
  3. Martin, Stephen & Normann, Hans-Theo & Snyder, Christopher M, 2001. "Vertical Foreclosure in Experimental Markets," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 466-96, Autumn.
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  9. Reinhard Selten & Michael Mitzkewitz & Gerald R. Uhlich, 1997. "Duopoly Strategies Programmed by Experienced Players," Econometrica, Econometric Society, vol. 65(3), pages 517-556, May.
  10. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
  11. Rees, Ray, 1993. "Collusive Equilibrium in the Great Salt Duopoly," Munich Reprints in Economics 3413, University of Munich, Department of Economics.
  12. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 1999. "Learning in Cournot Oligopoly--An Experiment," Economic Journal, Royal Economic Society, vol. 109(454), pages C80-95, March.
  13. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2000. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 39-57, January.
  14. Xiangkang Yin & Yew-Kwang Ng, 1995. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes: A Case with Product Differentiation," Working Papers 1995.23, School of Economics, La Trobe University.
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  17. Muren, Astri, 2000. "Quantity precommitment in an experimental oligopoly market," Journal of Economic Behavior & Organization, Elsevier, vol. 41(2), pages 147-157, February.
  18. Keser, Claudia, 2000. "Cooperation in symmetric duopolies with demand inertia," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 23-38, January.
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