IDEAS home Printed from https://ideas.repec.org/p/gro/rugsom/13008-eef.html
   My bibliography  Save this paper

The effect of industry structure and yardstick design on strategic behavior with yardstick competition

Author

Listed:
  • Dijkstra, P.T.
  • Haan, M.A.
  • Mulder, M.

    (Groningen University)

Abstract

We present an experiment on yardstick competition. Experimental firms set cost levels in each period and can communicate with each other in an attempt to increase the regulated price. We find that when market shares are heterogeneous, collusion is least frequent and prices are lowest. The number of players on a market also infuences prices, but to a lesser extent. Comparing across yardsticks, the discriminatory yardstick yields the lowest prices, while a best-practice yardstick yields the highest prices.

Suggested Citation

  • Dijkstra, P.T. & Haan, M.A. & Mulder, M., 2013. "The effect of industry structure and yardstick design on strategic behavior with yardstick competition," Research Report 13008-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    • Handle: RePEc:gro:rugsom:13008-eef
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/11370/286211ac-a362-4d34-80c1-150563723fc9
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(1), pages 1-12.
    3. Joanne Evans & Lester C. Hunt (ed.), 2009. "International Handbook on the Economics of Energy," Books, Edward Elgar Publishing, number 12764, March.
    4. Martin Cave & Keiko Hatta, 2009. "Transforming telecommunications technologies--policy and regulation," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(3), pages 488-505, Autumn.
    5. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    6. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    7. W. Kip Viscusi & Joseph E. Harrington & John M. Vernon, 2005. "Economics of Regulation and Antitrust, 4th Edition," MIT Press Books, The MIT Press, edition 4, volume 1, number 026222075x, December.
    8. Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616, June.
    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. repec:dgr:rugsom:13008-eef is not listed on IDEAS
    2. repec:dgr:rugsom:14010-eef is not listed on IDEAS
    3. Dijkstra, Peter & Haan, Marco A. & Mulder, Machiel, 2014. "Industry structure and collusion with uniform yardstick competition," Research Report 14010-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    4. Dijkstra, Peter T. & Haan, Marco A. & Mulder, Machiel, 2017. "Industry structure and collusion with uniform yardstick competition: Theory and experiments," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 1-33.
    5. Dijkstra, Peter T. & Haan, Marco A. & Mulder, Machiel, 2017. "Design of yardstick competition and consumer prices: Experimental evidence," Energy Economics, Elsevier, vol. 66(C), pages 261-271.
    6. Roux, Catherine & Thöni, Christian, 2015. "Collusion among many firms: The disciplinary power of targeted punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 83-93.
    7. Hinloopen, Jeroen & Onderstal, Sander, 2014. "Going once, going twice, reported! Cartel activity and the effectiveness of antitrust policies in experimental auctions," European Economic Review, Elsevier, vol. 70(C), pages 317-336.
    8. Chowdhury, Subhasish M. & Crede, Carsten J., 2020. "Post-cartel tacit collusion: Determinants, consequences, and prevention," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    9. Haucap, Justus & Heldman, Christina & Rau, Holger A., 2024. "Gender and cooperation in the presence of negative externalities," Games and Economic Behavior, Elsevier, vol. 147(C), pages 148-169.
    10. Kyle Hampton & Katerina Sherstyuk, 2012. "Demand shocks, capacity coordination, and industry performance: lessons from an economic laboratory," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 139-166, March.
    11. 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.
    12. Jan Potters & Sigrid Suetens, 2013. "Oligopoly Experiments In The Current Millennium," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 439-460, July.
    13. Bodnar, Olivia & Fremerey, Melinda & Normann, Hans-Theo & Schad, Jannika Leonie, 2021. "The effects of private damage claims on cartel activity: Experimental evidence," DICE Discussion Papers 315, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), revised 2021.
    14. Maria Bigoni & Sven-Olof Fridolfsson & Chloé Le Coq & Giancarlo Spagnolo, 2015. "Trust, Leniency, and Deterrence," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(4), pages 663-689.
    15. Nobuyuki Hanaki & Aidas Masiliunas, 2021. "Market Concentration and Incentives to Collude in Cournot Oligopoly Experiments," ISER Discussion Paper 1131, Institute of Social and Economic Research, Osaka University.
    16. Hinloopen, Jeroen & Onderstal, Sander & Treuren, Leonard, 2020. "Cartel stability in experimental first-price sealed-bid and English auctions," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    17. Philip Brookins & Dmitry Ryvkin & Andrew Smyth, 2021. "Indefinitely repeated contests: An experimental study," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1390-1419, December.
    18. Normann, Hans-Theo & Rösch, Jürgen & Schultz, Luis Manuel, 2015. "Do buyer groups facilitate collusion?," Journal of Economic Behavior & Organization, Elsevier, vol. 109(C), pages 72-84.
    19. Fischer, Christian & Normann, Hans-Theo, 2019. "Collusion and bargaining in asymmetric Cournot duopoly—An experiment," European Economic Review, Elsevier, vol. 111(C), pages 360-379.
    20. Peter T. Dijkstra & Marco A. Haan & Lambert Schoonbeek, 2021. "Leniency Programs and the Design of Antitrust: Experimental Evidence with Free-Form Communication," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(1), pages 13-36, August.
    21. Georg Clemens & Holger A. Rau, 2022. "Either with us or against us: experimental evidence on partial cartels," Theory and Decision, Springer, vol. 93(2), pages 237-257, September.
    22. Andreas Freitag & Catherine Roux & Christian Thöni, 2021. "Communication And Market Sharing: An Experiment On The Exchange Of Soft And Hard Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 175-198, February.

    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:gro:rugsom:13008-eef. 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: Hanneke Tamling (email available below). General contact details of provider: https://edirc.repec.org/data/ferugnl.html .

    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.