Wholesale Competition, Open Access Regulation and Tacit Collusion: Experimental Evidence

58 Pages Posted: 10 Aug 2017 Last revised: 24 Dec 2018

See all articles by Niklas Horstmann

Niklas Horstmann

Karlsruhe Institute of Technology

Jan Kraemer

University of Passau; Center on Regulation in Europe (CERRE)

Daniel Schnurr

University of Regensburg

Date Written: November 30, 2018

Abstract

We consider the market scenario where wholesale access for a non-integrated reseller is provided competitively by two vertically integrated firms. In a continuous-time economic laboratory experiment with both student and expert participants we compare market outcomes under different modes of wholesale competition as well as under an open access regulation preventing a margin squeeze. We find that wholesale competition can facilitate tacit collusion, which yields wholesale and retail prices even above the monopoly level. However, we show that a simple price commitment rule can substantially reduce tacit collusion. Moreover, we do not find evidence that margin squeeze regulation benefits consumers.

Keywords: upstream competition; access regulation; vertical integration; margin squeeze regulation; open access; tacit collusion; experimental economics

JEL Classification: C90; L13; L22; L51

Suggested Citation

Horstmann, Niklas and Kraemer, Jan and Schnurr, Daniel, Wholesale Competition, Open Access Regulation and Tacit Collusion: Experimental Evidence (November 30, 2018). Available at SSRN: https://ssrn.com/abstract=2630660 or http://dx.doi.org/10.2139/ssrn.2630660

Niklas Horstmann

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

Center on Regulation in Europe (CERRE) ( email )

Rue de l'Industrie 42
Brussels, 1040
Belgium

Daniel Schnurr (Contact Author)

University of Regensburg ( email )

Bajuwarenstrasse 4
Regensburg, 93040
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
118
Abstract Views
1,978
Rank
280,340
PlumX Metrics