Pure Numbers Effects, Market Power, and Tacit Collusion in Posted Offer Markets
نویسنده
چکیده
This paper studies the effects of seller concentration and static market power on tacit collusion in extensively repeated laboratory posted-offer markets. Contrary to the implications of some earlier research, we find that tacit collusion does not become pervasive with extensive repetition. In a ‘strong no power’ design persistently competitive outcomes are observed in markets with three or four sellers. Even duopolies are frequently competitive in this design. Unilateral market power raises prices, as predicted. However, static Nash predictions fail to organize outcomes across power treatments, because tacit collusion moves inversely with concentration. Excess capacity appears to explain observed tacit collusion levels.
منابع مشابه
Supra-Competitive Prices and Market Power in Posted-Offer Experiments
This paper reports the results of a series of posted-offer experiments designed to examine the effects of static market power on prices, when other factors such as excess supply, the number of sellers, and dynamic incentives are held constant. Static market power results in a dramatic price increase in posted-offer triopolies with complete demand information. The effects of market power are not...
متن کاملTacit collusion , firm asymmetries and numbers : evidence from EC merger cases ∗
This paper estimates the implicit model, especially the roles of size asymmetries and firm numbers, used by the European Commission to identify mergers with coordinated effects. This subset of cases offers an opportunity to shed empirical light on the conditions where a Competition Authority believes tacit collusion is most likely to arise. We find that, for the Commission, tacit collusion is a...
متن کاملTacit collusion games in pool-based electricity markets under transmission constraints
Harrington et al. [21] introduced a general framework for modeling tacit collusion in which producing firms collectively maximize the Nash bargaining objective function, subject to incentive compatibility constraints. This work extends that collusion model to the setting of a competitive pool-based electricity market operated by an independent system operator. The extension has two features. Fi...
متن کاملSupra-Competitive Pricing in Laboratory Markets (for the New Palgrave Dictionary of Economics
Despite the robust tendency of laboratory markets to generate competitive outcomes, some market designs deviate persistently from competitive predictions. This essay discusses the primary drivers of supra-competitive prices that have been observed in market experiments. Trading Institutions and Market Performance. The robustness of competitive market predictions stands as one of the most impres...
متن کاملIntermediation, Compensation and Collusion in Insurance Markets
Recent events involving major insurance companies and insurance brokerage firms highlight substantial incentive problems in commercial and reinsurance markets where intermediation takes place. We show that in markets with informed as well as uninformed consumers and heterogeneous risk profiles intermediation has the potential to improve social welfare. However, since intermediation reduces insu...
متن کامل