IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v81y2015i3p633-652.html
   My bibliography  Save this article

Determinants of Tacit Collusion in a Cournot Duopoly Experiment

Author

Listed:
  • Lisa R. Anderson
  • Beth A. Freeborn
  • Jason P. Hulbert

Abstract

We contribute to a growing literature that examines the relationship between the nature of strategic interaction and collusive behavior. We present results from a repeated Cournot duopoly experiment with treatments in which quantity choices are either strategic complements or substitutes. The initial underlying demand function allows for direct comparison with previous work utilizing a Bertrand duopoly setting. We find some evidence of collusion in the substitutes treatment, but no collusion in the complements treatment. We study an additional substitutes treatment to control for the absolute slope of the reaction functions across treatments, where we again find evidence of collusive behavior. However, using an alternate demand function parameterization where the goods are less closely related, we find no evidence of collusive behavior in either the substitutes or the complements treatment.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:soecon:v:81:y:2015:i:3:p:633-652
    DOI: 10.4284/0038-4038-2013.187
    as

    Download full text from publisher

    File URL: https://doi.org/10.4284/0038-4038-2013.187
    Download Restriction: no
    File URL: https://libkey.io/10.4284/0038-4038-2013.187?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. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
    2. F. T. Dolbear & L. B. Lave & G. Bowman & A. Lieberman & E. Prescott & F. Rueter & R. Sherman, 1968. "Collusion in Oligopoly: An Experiment on the Effect of Numbers and Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(2), pages 240-259.
    3. 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.
    4. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    5. Sigrid Suetens & Jan Potters, 2007. "Bertrand colludes more than Cournot," Experimental Economics, Springer;Economic Science Association, vol. 10(1), pages 71-77, March.
    6. Davis, Douglas D., 2002. "Strategic interactions, market information and predicting the effects of mergers in differentiated product markets," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1277-1312, November.
    7. 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.
    8. 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.
    9. Altavilla, Carlo & Luini, Luigi & Sbriglia, Patrizia, 2006. "Social learning in market games," Journal of Economic Behavior & Organization, Elsevier, vol. 61(4), pages 632-652, December.
    10. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2000. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 39-57, January.
    11. Lisa R. Anderson & Beth A. Freeborn & Charles A. Holt, 2010. "Tacit Collusion in Price-Setting Duopoly Markets: Experimental Evidence with Complements and Substitutes," Southern Economic Journal, John Wiley & Sons, vol. 76(3), pages 577-591, January.
    12. 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.
    13. Feinberg, Robert M & Husted, Thomas A, 1993. "An Experimental Test of Discount-Rate Effects on Collusive Behaviour in Duopoly Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 153-160, June.
    14. Holt, Charles A. & Laury, Susan K., 2008. "Theoretical Explanations of Treatment Effects in Voluntary Contributions Experiments," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 90, pages 846-855, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nobuyuki Hanaki & Ali I. Ozkes, 2023. "Strategic environment effect and communication," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 588-621, July.

    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. 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.
    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. 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.
    4. 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.
    5. Masiliūnas, Aidas & Nax, Heinrich H., 2020. "Framing and repeated competition," Games and Economic Behavior, Elsevier, vol. 124(C), pages 604-619.
    6. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
    7. 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.
    8. Sigrid Suetens & Jan Potters, 2007. "Bertrand colludes more than Cournot," Experimental Economics, Springer;Economic Science Association, vol. 10(1), pages 71-77, March.
    9. 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.
    10. Tong Zhang & B. Brorsen, 2011. "Oligopoly firms with quantity-price strategic decisions," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 6(2), pages 157-170, November.
    11. Bigoni, Maria & Suetens, Sigrid, 2012. "Feedback and dynamics in public good experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 86-95.
    12. 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.
    13. Barthel, Anne-Christine & Hoffmann, Eric & Monaco, Andrew, 2019. "Coordination and learning in games with strategic substitutes and complements," Research in Economics, Elsevier, vol. 73(1), pages 53-65.
    14. Till Requate & Israel Waichman, 2011. "“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 36-46, March.
    15. 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.
    16. Snir, Avichai, 2014. "When choosing to be almost certain of winning can be better than choosing to win with certainty," European Journal of Political Economy, Elsevier, vol. 36(C), pages 135-146.
    17. Nobuyuki Hanaki & Ali I. Ozkes, 2023. "Strategic environment effect and communication," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 588-621, July.
    18. Matthew Embrey & Friederike Mengel & Ronald Peeters, 2019. "Strategy revision opportunities and collusion," Experimental Economics, Springer;Economic Science Association, vol. 22(4), pages 834-856, December.
    19. Christoph Bühren & Thorben C. Kundt, 2013. "Worker or Shirker – Who Evades More Taxes? A Real Effort Experiment," MAGKS Papers on Economics 201326, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    20. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Contracting under Incomplete Information and Social Preferences: An Experimental Study," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1516-1544.

    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:81:y:2015:i:3:p:633-652. 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.