Firm-Specific Information and Explicit Collusion in Experimental Oligopolies

Tinbergen Institute Discussion Paper 15-054/I

27 Pages Posted: 13 May 2015

See all articles by Francisco Gomez-Martinez

Francisco Gomez-Martinez

Universidad Carlos III Madrid

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Joep Sonnemans

University of Amsterdam - Amsterdam School of Economics (ASE)

Date Written: May 10, 2015

Abstract

We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: Markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.

Keywords: Cournot oligopoly; Cartels; Information; Experiments

JEL Classification: C92, L13, L41

Suggested Citation

Gomez-Martinez, Francisco and Onderstal, Sander and Sonnemans, Joep, Firm-Specific Information and Explicit Collusion in Experimental Oligopolies (May 10, 2015). Tinbergen Institute Discussion Paper 15-054/I, Available at SSRN: https://ssrn.com/abstract=2605054 or http://dx.doi.org/10.2139/ssrn.2605054

Francisco Gomez-Martinez (Contact Author)

Universidad Carlos III Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain
+34694481107 (Phone)

HOME PAGE: http://www.eco.uc3m.es/personal/fragomez/

Sander Onderstal

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Joep Sonnemans

University of Amsterdam - Amsterdam School of Economics (ASE) ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 525 4249 (Phone)
+31 20 525 5283 (Fax)

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