Firm-Specific Information and Explicit Collusion in Experimental Oligopolies

Firm-Specific Information and Explicit Collusion in Experimental Oligopolies
Date: 2015-05-10
By: Francisco Gomez-Martin (University of Amsterdam)
Sander Onderstal (University of Amsterdam)
Joep Sonnemans (University of Amsterdam)
URL: http://d.repec.org/n?u=RePEc:tin:wpaper:20150054&r=net
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.
Keywords: Cournot oligopoly; Cartels; Information; Experiments
JEL: C92 L13 L41

Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment

Date: 2014-09-01
By: Jos Jansen (Department of Economics and Business, Aarhus University, Denmark)
Andreas Pollak (University of Cologne)
URL: http://d.repec.org/n?u=RePEc:aah:aarhec:2014-20&r=net
We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where firms may fail to receive information, we show that firms selectively disclose information in equilibrium in order to influence their competitor’s product-market strategy. Subsequently, we analyze the firms’ behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, subjects in our experiment display product-market conduct that is largely consistent with theoretical predictions.
Keywords: duopoly, Cournot competition, Bertrand competition, information disclosure, incomplete information, common value, product differentiation, asymmetry, skewed distribution, laboratory experiment
JEL: C92 D22 D82 D83 L13 M4

Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment

Date: 2014-09-01
By: Jos Jansen
Andreas Pollak
URL: http://d.repec.org/n?u=RePEc:kls:series:0075&r=net
We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where firms may fail to receive information, we show that firms selectively disclose information in equilibrium in order to influence their competitor’s product-market strategy. Subsequently, we analyze the firms’ behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, subjects in our experiment display product-market conduct that is largely consistent with theoretical predictions.
Keywords: duopoly, Cournot competition, Bertrand competition, information disclosure, incomplete information, common value, product differentiation, asymmetry, skewed distribution, laboratory experiment
JEL: C92 D22 D82 D83 L13 M4