Number Effects and Tacit Collusion in Experimental Oligopolies

60 Pages Posted: 11 Dec 2014 Last revised: 29 Oct 2016

Niklas Horstmann

Karlsruhe Institute of Technology

Jan Kraemer

University of Passau

Daniel Schnurr

University of Passau

Date Written: October 24, 2016

Abstract

We systematically investigate the relationship between the number of firms in a market and tacit collusion by means of a meta-analysis of the literature on oligopoly experiments as well as two own experiments with a total of 368 participants. We show that the degree of tacit collusion decreases strictly with the number of competitors in industries with two, three and four firms. Although previous literature could not affirm that triopolies are more collusive than quadropolies, we provide evidence for this fact for symmetric and asymmetric firms under Bertrand and Cournot competition.

Keywords: Experimental economics, Oligopolies, Tacit collusion, Number of competitors

JEL Classification: L13, D21, D43, C92

Suggested Citation

Horstmann, Niklas and Kraemer, Jan and Schnurr, Daniel, Number Effects and Tacit Collusion in Experimental Oligopolies (October 24, 2016). Available at SSRN: https://ssrn.com/abstract=2535862 or http://dx.doi.org/10.2139/ssrn.2535862

Niklas Horstmann (Contact Author)

Karlsruhe Institute of Technology ( email )

Institute of Information Systems and Marketing
Fritz-Erler-Str. 23
Karlsruhe, 76133
Germany
+49 721 608-48378 (Phone)
+49 721 608-48399 (Fax)

HOME PAGE: http://iism.kit.edu/im/horstmann

Jan Kraemer

University of Passau ( email )

Chair of Internet and Telecommunications Business
Dr.-Hans-Kapfinger-Str. 12
Passau, D-94036
Germany
+498515092580 (Phone)
+498525092582 (Fax)

HOME PAGE: http://www.kraemer.biz

Daniel Schnurr

University of Passau ( email )

Dr.-Hans-Kapfinger-Str. 12
Passau, 94032
Germany

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