Oligopoly Competition in Continuous Time
36 Pages Posted: 22 Sep 2015 Last revised: 29 Oct 2016
Date Written: August 22, 2016
We conduct oligopoly competition experiments with differentiated goods in discrete and continuous time. Continuous time experiments allow for real-time, asynchronous strategic interaction and are therefore argued to be a more realistic mode of interaction, particularly in the context of (electronic) markets. We consider duopolies and triopolies both under Bertrand as well as Cournot competition and consistently find that, ceteris paribus, tacit collusion is higher under discrete time than under continuous time, which contrasts the theoretical prediction. Thus, our results bear important methodological implications for research on oligopoly competition.
Keywords: oligopoly competition, experiment, continuous time, discrete time, tacit collusion
JEL Classification: C90, C92, D43, L13
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