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A Classroom Experiment On Oligopolies

Author

Listed:
  • Nelson, Robert G.
  • Beil, Richard O., Jr.

Abstract

This experiment demonstrates principles of decision-making in dynamic oligopolies, especially the difficulties in forming and maintaining cartels. As an illustration of firm behavior under imperfect competition, the game distinguishes between procedurally rational choices and substantively rational decisions in the context of collusive, Cournot, and competitive equilibria. The paper discusses results from an actual classroom exercise and suggests some additional variations in institutional details. Instructions for students and a spreadsheet program for producing payoff tables are provided in the appendices.

Suggested Citation

  • Nelson, Robert G. & Beil, Richard O., Jr., 1995. "A Classroom Experiment On Oligopolies," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-13, July.
    • Handle: RePEc:ags:joaaec:15353
    DOI: 10.22004/ag.econ.15353
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    File URL: https://ageconsearch.umn.edu/record/15353/files/27010263.pdf
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    References listed on IDEAS

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    1. James W. Friedman, 1965. "An Experimental Study of Cooperative Duopoly," Cowles Foundation Discussion Papers 192, Cowles Foundation for Research in Economics, Yale University.
    2. Dan Alger, 1987. "Laboratory Tests of Equilibrium Predictions with Disequilibrium Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(1), pages 105-145.
    3. Friedman,Daniel & Sunder,Shyam, 1994. "Experimental Methods," Cambridge Books, Cambridge University Press, number 9780521456821, October.
    4. Samuel M. Curtis, 1968. "The Use of a Business Game for Teaching Farm Business Analysis to High School and Adult Students," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(4), pages 1025-1033.
    5. Holt, Charles A, 1985. "An Experimental Test of the Consistent-Conjectures Hypothesis," American Economic Review, American Economic Association, vol. 75(3), pages 314-325, June.
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    Cited by:

    1. Correa, Manuel & García-Quero, Fernando & Ortega-Ortega, Marta, 2016. "A role-play to explain cartel behavior: Discussing the oligopolistic market," International Review of Economics Education, Elsevier, vol. 22(C), pages 8-15.

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