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Price leadership and unequal market sharing: Collusion in experimental markets

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  • Dijkstra, Peter T.

Abstract

We consider experimental markets of repeated homogeneous price-setting duopolies. We investigate the effect on collusion of sequential versus simultaneous price setting. We also examine the effect on collusion of changes in the size of each subject's market share in case both subjects set the same price. Our results show that sequential price setting compared with simultaneous price setting facilitates collusion, if subjects have equal market shares or if the follower has the larger market share. With sequential price setting, we find more collusion if subjects have equal market shares rather than unequal market shares. We observe more collusion if the follower has the larger market share than if the follower has the smaller market share.

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  • Dijkstra, Peter T., 2015. "Price leadership and unequal market sharing: Collusion in experimental markets," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 80-97.
    • Handle: RePEc:eee:indorg:v:43:y:2015:i:c:p:80-97
    DOI: 10.1016/j.ijindorg.2015.08.003
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    More about this item

    Keywords

    Collusion; Price leadership; Asymmetries; Experiment;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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