Uncertainty, Information Sharing and Tacit Collusion in Laboratory Duopoly Markets

Univ. of Wyoming Economics & Finance WP No. 34

36 Pages Posted: 29 Oct 1998

See all articles by Timothy N. Cason

Timothy N. Cason

Purdue University - Krannert School of Management

Charles F. Mason

University of Wyoming - College of Business - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 1998

Abstract

This paper reports 45 laboratory duopoly markets that examine the importance of information sharing in facilitating tacit collusion under conditions of demand uncertainty. Sellers in these repeated laboratory markets generally shared information when possible to reduce their demand uncertainty, which led to output reductions in some demand states. Risk aversion is a likely explanation for this sharing, but some sellers also appeared to employ a strategy of information concealment to punish non-colluding rivals. Nevertheless, output choices were similar in control treatments that forced sellers to share or conceal information, so the information sharing itself did not substantially increase tacit collusion.

JEL Classification: C92, D80, L13

Suggested Citation

Cason, Timothy N. and Mason, Charles F., Uncertainty, Information Sharing and Tacit Collusion in Laboratory Duopoly Markets (April 1998). Univ. of Wyoming Economics & Finance WP No. 34. Available at SSRN: https://ssrn.com/abstract=128253 or http://dx.doi.org/10.2139/ssrn.128253

Timothy N. Cason

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-1737 (Phone)

Charles F. Mason (Contact Author)

University of Wyoming - College of Business - Department of Economics ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-5336 (Phone)
307-766-5090 (Fax)

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