Semi-Collusive Advertising and Pricing in Experimental Duopolies

24 Pages Posted: 17 Jul 2008  

Andreas Nicklisch

University of Hamburg - School of Business, Economics and Social Sciences; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Date Written: June 1, 2008

Abstract

This article tests experimentally whether a high degree of collusion on advertisement expenditures facilitate tacit price collusion in duopoly markets. Two environments are tested, in which the size of the spillover between advertising expenditures is varied. The results show that the competitiveness of advertising and prices are significantly higher when the advertising spillover is higher than the price spillover than when advertising spillover is lower than the price spillover. In the second environment, a higher degree of advertising collusion leads for experienced players to a higher degree of price collusion. In the first environment, players behave at most semi-collusively, that is, if at all, they collude on advertising, but compete over prices.

Keywords: Advertising, duopoly competition, experimental economics, price collusion, semi-collusive markets

JEL Classification: D43, L13, M37

Suggested Citation

Nicklisch, Andreas, Semi-Collusive Advertising and Pricing in Experimental Duopolies (June 1, 2008). MPI Collective Goods Preprint, No. 2008/25. Available at SSRN: https://ssrn.com/abstract=1161076 or http://dx.doi.org/10.2139/ssrn.1161076

Andreas Nicklisch (Contact Author)

University of Hamburg - School of Business, Economics and Social Sciences ( email )

Von-Melle-Park 5
Hamburg, D-20354
Germany

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
49 228 9141679 (Phone)
49 228 9141655 (Fax)

HOME PAGE: http://www.coll.mpg.de/nicklisch.html

Paper statistics

Downloads
63
Rank
288,513
Abstract Views
523