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Industry structure and collusion with uniform yardstick competition

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  • Dijkstra, Peter
  • Haan, Marco A.
  • Mulder, Machiel

    (Groningen University)

Abstract

We study cartel stability in an industry that is subject to uniform yardstick regulation. In a theoretical model, we show that the number of symmetric firms does not affect collusion. In a laboratory experiment, however, we do find an effect. If anything, increasing the number of firms facilitates collusion. Our theory suggests that an increase in heterogeneity increases the regulated price if firms do not collude, but also makes collusion harder, rendering the net effect ambiguous. Our experiment suggests that the effect of collusion is stronger.

Suggested Citation

  • 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).
    • Handle: RePEc:gro:rugsom:14010-eef
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    File URL: http://hdl.handle.net/11370/0cd180f7-2f09-4f15-9788-2b856cd5ed2a
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    References listed on IDEAS

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    Cited by:

    1. Dijkstra, Pieter & Haan, Marco & Mulder, Machiel, 2015. "Design of yardstick competition and consumer prices," Research Report 15004-EEF, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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    4. Xiaofeng Xu & Jun Hao & Yirui Deng, 2017. "Industry Interdependence Dynamics and Structure Change Causal Analysis: An Empirical Study on China’s Shipbuilding Industry," Sustainability, MDPI, vol. 9(4), pages 1-19, March.

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