Collusion in experimental bertrand duopolies with convex costs

The role of cost asymmetry

Research output: Contribution to journalArticleScientificpeer-review

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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Costs
Profitability
Cost asymmetry
Collusion
Experimental study
Symmetry
Asymmetry
Profit

Cite this

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title = "Collusion in experimental bertrand duopolies with convex costs: The role of cost asymmetry",
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.",
author = "C. Argenton and W. M{\"u}ller",
note = "Appeared earlier as CentER Discussion Paper 2009-087",
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Collusion in experimental bertrand duopolies with convex costs : The role of cost asymmetry. / Argenton, C.; Müller, W.

In: International Journal of Industrial Organization, Vol. 30, No. 6, 2012, p. 508-517.

Research output: Contribution to journalArticleScientificpeer-review

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AU - Müller, W.

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AB - 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.

U2 - 10.1016/j.ijindorg.2012.05.006

DO - 10.1016/j.ijindorg.2012.05.006

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JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

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