With this study we resume the search for a collusive focal-point effect of price ceilings in laboratory markets. We argue that market conditions in previous studies were unfavorable for collusion which may have been responsible for not finding such a focal-point effect. Our design aims at maximizing the likelihood of a focal-point effect. Nevertheless, our results again fail to support the focal-point hypothesis. Collusion is as unlikely in markets with a price ceiling as in markets with unconstrained pricing. Overall, the static Nash equilibrium predicts the data fairly accurately. We argue that this might warrant re-interpretation of field studies on anti-competitive effects of price ceilings.
|Place of Publication||Tilburg|
|Publication status||Published - 2008|
|Name||TILEC Discussion Paper|
- competition policy
- experimental economics
- focal point
Engelmann, D., & Müller, W. (2008). Collusion through Price Ceilings? In Search of a Focal-Point Effect. (TILEC Discussion Paper; Vol. 2008-036). TILEC. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1281450