Capacity precommitment, communication, and collusive pricing: theoretical benchmark and experimental evidence

Abstract

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Coordination Failure in Capacity-then-Price-Setting Games

“…While these conditions are implemented between-subjects, additionally "cheap talk" or "no communication" after capacity but before price choices is implemented as a within-subjects variation. However, as cheap talk as such does not affect the threat of losses, we focus only on the data of conditions without cheap talk in the following (for an analysis of cheap talk versus no communication see Güth et al, 2018). The considered variations allow for a thorough analysis of possibly path-dependent price and capacity choices in multi-stage games.…”