Collusion in experimental bertrand duopolies with convex costs: The role of cost asymmetry

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Abstract

Theory, experimental studies, as well as antitrust guidelines suggest that symmetry among firms is conducive to more collusive outcomes. We test this perception in a series of experimental repeated Bertrand duopolies where firms have convex costs. We implement symmetric as well as asymmetric markets that vary in their degree of cost asymmetry among firms. We find no evidence of symmetric markets being more prone to collusion than asymmetric markets. If anything, asymmetry helps firms coordinate on higher prices and achieve higher profits.
Original languageEnglish
Pages (from-to)508-517
JournalInternational Journal of Industrial Organization
Volume30
Issue number6
DOIs
Publication statusPublished - 2012

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