Counterintuitive number effects in experimental oligopolies

Orzen, Henrik

doi:10.1007/s10683-007-9174-0

Cited by 34 publications

(29 citation statements)

References 18 publications

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“…As the number of firms increases markets become more competitive and firms tend to produce even more than the Nash level. Orzen (2008) studies a price-competition setting where standard theory predicts that expected prices increase with the number of firms in the market. In the experiment he finds the opposite effect: outcomes are more collusive in two-than four-firm markets.…”

Section: Introductionmentioning

confidence: 99%

Cooperation in small groups: the effect of group size

2013

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We study the effect of group size on cooperation in voluntary contribution mechanism games. As in previous experiments, we study four-and eight-person groups in high and low marginal per capita return (MPCR) conditions. We find a positive effect of group size in the low MPCR condition, as in previous experiments. However, in the high MPCR condition we observe a negative group size effect. We extend the design to investigate two-and three-person groups in the high MPCR condition, and find that cooperation is highest of all in two-person groups. The findings in the high MPCR condition are consistent with those from n-person prisoner's dilemma and oligopoly experiments that suggest it is more difficult to sustain cooperation in larger groups. The findings from the low MPCR condition suggest that this effect can be overridden. In particular, when cooperation is low other factors, such as considerations of the social benefits of contributing (which increase with group size), may dominate any negative group size effect.

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Section: Introductionmentioning

confidence: 99%

Cooperation in small groups: the effect of group size

2013

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“…6 The authors concluded that the total level of production concentration is not as important as capacity distribution. The ambiguous interrelation between concentration and collusion sustainability is confirmed in, for example, Alger [1987], Orzen [2008], and Davis [2009].…”

Section: The Law and Economics Of Collusion Identificationmentioning

confidence: 89%

“…As a result, localized production and delivery of Q for Y will not occur. The only difference between this scenario and the first alternative is the outcome probability derived from detailed project preparation 19 . The long-term absence of LDP production (for several decades), which corresponds to the first and second points above, despite a natural need (transportation of gas and oil over large distances) and capability (developed metallurgical base) may indirectly indicate that the problem of credible commitments was not solved.…”

Section: Credible Commitments In Ldp Production and Trade Relationshipsmentioning

confidence: 99%

Collusion in Markets Characterized by One Large Buyer: Lessons Learned from an Antitrust Case in Russia

Shastitko

Golovanova

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper demonstrates that even established and verified facts of agreements among producers are not a sufficient condition for cartel identification and, as a consequence, prosecution of agreement participants. Such requires looking at institutional details and the wider context of these and similar appearances or occurrences of documents and actions when qualifying the actions of market participants and their effects. This paper discusses a recent antitrust case brought against Russian manufacturers of large diameter pipes (LDPs) that examined supposedly abusive practices by these firms that were contrary to the law on the Protection of Competition, which prohibits market division. The case under consideration illustrates the importance of investigating institutional details when qualifying the actions of market participants and their effects. An analysis of the materials in this case using modern economic theory indicates that the presence of collusion is inconsistent with the active participation of the main consumer of LDPs in that agreement. The chosen format for the cooperation between pipe manufacturing companies and OJSC Gazprom, namely indicative planning, may be explained from the perspective of reducing contract risk in an environment characterized by large-scale private investments. Terms of use: Documents inJEL Classification: K21, B52

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“…The Edgeworth price adjustment process is stronger for treatments with lower production capac-3 See also the recent related studies on price dispersion by Morgan et al 2006 andOrzen (2008) where the equilibrium is also in mixed strategies.…”

Section: Introductionmentioning

confidence: 99%

Excess Capacity and Pricing in Bertrand-Edgeworth Markets: Experimental Evidence

Fonseca¹,

Normann²

2013

JITE

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We conduct experiments testing the relationship between excess capacity and pricing in BertrandEdgeworth duopolies and triopolies. We systematically vary the experimental markets between small amount of excess capacity (suggesting monopoly) and no capacity constraints (suggesting perfect competition). Controlling for the number of firms, higher production capacity leads to lower prices. However, the decline in prices as industry capacity rises is less pronounced than predicted by Nash equilibrium, and a model of myopic price adjustments has greater predictive power. With higher capacities, Edgeworth-cycle behavior becomes less pronounced, causing lower prices. Evidence for collusion is limited and restricted to low-capacity duopolies. * Financial support from the Nuffield Foundation (Grant number SGS/36496) is gratefully acknowledged. We thank Tim Miller for programming the software and helping running the sessions. We are also grateful to participants at seminars at the University of Exeter, Universidade do Minho, the University of East Anglia's conference on Cartels and Tacit Collusion, and the Portuguese Economic Journal 2009 meeting, for insightful comments and suggestions.

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Counterintuitive number effects in experimental oligopolies

Abstract: Market concentration, Experiments, Tacit collusion, C72, C92, D43,

Cited by 34 publications

References 18 publications

Cooperation in small groups: the effect of group size

Cooperation in small groups: the effect of group size

Collusion in Markets Characterized by One Large Buyer: Lessons Learned from an Antitrust Case in Russia

Excess Capacity and Pricing in Bertrand-Edgeworth Markets: Experimental Evidence

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