IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v79y2013i3p703-726.html
   My bibliography  Save this article

Tacit Collusion in Price‐Setting Oligopoly: A Puzzle Redux

Author

Listed:
  • Matt Van Essen
  • William B. Hankins

Abstract

We study tacit collusion in price‐setting duopoly games with strategic complements and substitutes. While this problem has been considered by several studies, this article sheds new light on the comparison by focusing on the relationship between dynamic stability of equilibrium and tacit collusion. We find when controlling for the absolute slope of the reaction functions, there are no robust differences in either the convergence properties or tacit collusion between complements and substitutes treatments.

Suggested Citation

  • Matt Van Essen & William B. Hankins, 2013. "Tacit Collusion in Price‐Setting Oligopoly: A Puzzle Redux," Southern Economic Journal, John Wiley & Sons, vol. 79(3), pages 703-726, January.
  • Handle: RePEc:wly:soecon:v:79:y:2013:i:3:p:703-726
    DOI: 10.4284/0038-4038-2011.157
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/0038-4038-2011.157
    Download Restriction: no

    File URL: https://libkey.io/10.4284/0038-4038-2011.157?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
    2. Potters, J.J.M. & Suetens, S., 2006. "Cooperation in Experimental Games of Strategic Complements and Substitutes," Other publications TiSEM 7620271d-3075-48ed-b03b-a, Tilburg University, School of Economics and Management.
    3. Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2002. "Stability of the Cournot process - experimental evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(1), pages 123-136.
    4. Suetens, S. & Potters, J.J.M., 2007. "Bertrand colludes more than Cournot," Other publications TiSEM 884b5bf4-2acb-4ce8-b2bf-4, Tilburg University, School of Economics and Management.
    5. Davis, Douglas, 2011. "Behavioral convergence properties of Cournot and Bertrand markets: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 443-458.
    6. Jan Potters & Sigrid Suetens, 2009. "Cooperation in Experimental Games of Strategic Complements and Substitutes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 1125-1147.
    7. Sigrid Suetens & Jan Potters, 2007. "Bertrand colludes more than Cournot," Experimental Economics, Springer;Economic Science Association, vol. 10(1), pages 71-77, March.
    8. Yan Chen & Robert Gazzale, 2004. "When Does Learning in Games Generate Convergence to Nash Equilibria? The Role of Supermodularity in an Experimental Setting," American Economic Review, American Economic Association, vol. 94(5), pages 1505-1535, December.
    9. Rabah Amir, 2005. "Supermodularity and Complementarity in Economics: An Elementary Survey," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 636-660, January.
    10. Christoph Engel, 2007. "How Much Collusion? A Meta-Analysis Of Oligopoly Experiments," Journal of Competition Law and Economics, Oxford University Press, vol. 3(4), pages 491-549.
    11. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    12. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, December.
    13. Cox, James C. & Walker, Mark, 1998. "Learning to play Cournot duopoly strategies," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 141-161, August.
    14. Milgrom, Paul & Roberts, John, 1991. "Adaptive and sophisticated learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 82-100, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Davis, Douglas, 2011. "Behavioral convergence properties of Cournot and Bertrand markets: An experimental analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 443-458.
    2. Jan Potters & Sigrid Suetens, 2013. "Oligopoly Experiments In The Current Millennium," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 439-460, July.
    3. Potters, Jan & Suetens, Sigrid, 2020. "Optimization incentives in dilemma games with strategic complementarity," Other publications TiSEM e89234c8-de8f-42cc-a3dc-2, Tilburg University, School of Economics and Management.
    4. Argenton, Cedric & Ivanova-Stenzel, Radosveta & Müller, Wieland, 2022. "Cournot meets Bayes-Nash : A Discontinuity in Behavior Infinitely Repeated Duopoly Games," Other publications TiSEM 03d1f1c4-0f0f-4d7c-8428-4, Tilburg University, School of Economics and Management.
    5. Mermer, Ayşe Gül & Müller, Wieland & Suetens, Sigrid, 2021. "Cooperation in infinitely repeated games of strategic complements and substitutes," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 1191-1205.
    6. Lisa Anderson & Beth Freeborn & Jason Hulbert, 2012. "Risk Aversion and Tacit Collusion in a Bertrand Duopoly Experiment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 40(1), pages 37-50, February.
    7. Argenton, Cédric & Ivanova-Stenzel, Radosveta & Müller, Wieland, 2024. "Cournot meets Bayes-Nash: A discontinuity in behavior in finitely repeated duopoly games," Games and Economic Behavior, Elsevier, vol. 144(C), pages 1-12.
    8. Masiliūnas, Aidas & Nax, Heinrich H., 2020. "Framing and repeated competition," Games and Economic Behavior, Elsevier, vol. 124(C), pages 604-619.
    9. Potters, Jan & Suetens, Sigrid, 2020. "Optimization incentives in dilemma games with strategic complementarity," European Economic Review, Elsevier, vol. 127(C).
    10. Miettinen, Topi, 2013. "Promises and conventions – An approach to pre-play agreements," Games and Economic Behavior, Elsevier, vol. 80(C), pages 68-84.
    11. Lisa R. Anderson & Beth A. Freeborn & Jason P. Hulbert, 2015. "Determinants of Tacit Collusion in a Cournot Duopoly Experiment," Southern Economic Journal, John Wiley & Sons, vol. 81(3), pages 633-652, January.
    12. Potters, J.J.M. & Suetens, S., 2009. "Cooperation in experimental games of strategic complements and substitutes," Other publications TiSEM 694e692f-f551-421e-8cf0-a, Tilburg University, School of Economics and Management.
    13. Bosworth, Steven J. & Singer, Tania & Snower, Dennis J., 2016. "Cooperation, motivation and social balance," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 72-94.
    14. Bosworth, Steven J. & Singer, Tania & Snower, Dennis J., 2016. "Cooperation, motivation and social balance," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 72-94.
    15. Jan Potters & Sigrid Suetens, 2009. "Cooperation in Experimental Games of Strategic Complements and Substitutes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 1125-1147.
    16. Argenton, Cédric & Ivanova-Stenzel, Radosveta & Müller, Wieland, 2024. "Cournot meets Bayes-Nash : A discontinuity in behavior in finitely repeated duopoly games," Other publications TiSEM 603ef683-1dca-4c30-b7e8-2, Tilburg University, School of Economics and Management.
    17. Lenka Fiala & Sigrid Suetens, 2017. "Transparency and cooperation in repeated dilemma games: a meta study," Experimental Economics, Springer;Economic Science Association, vol. 20(4), pages 755-771, December.
    18. Olli Lappalainen, 2018. "Cooperation and Strategic Complementarity: An Experiment with Two Voluntary Contribution Mechanism Games with Interior Equilibria," Games, MDPI, vol. 9(3), pages 1-24, July.
    19. Bayar, Tumennasan & Cornett, Marcia Millon & Erhemjamts, Otgontsetseg & Leverty, Ty & Tehranian, Hassan, 2018. "An examination of the relation between strategic interaction among industry firms and firm performance," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 248-263.
    20. Ulrich Berger, 2004. "Two More Classes of Games with the Fictitious Play Property," Game Theory and Information 0408003, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:79:y:2013:i:3:p:703-726. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.