How Much Collusion? A Meta-Analysis on Oligopoly Experiments

62 Pages Posted: 12 Dec 2006

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: December 2006

Abstract

Oligopoly has been among the first topics in the experimental economics. Over half a century, some 150 papers have been published. Each individual paper was interested in demonstrating one effect. But in order to do so, experimenters had to specify many more parameters. That way they have generated a huge body of evidence, untapped thus far. This meta-analysis makes this evidence available. More than 100 of the papers lend themselves to calculating an index of collusion. The data bank behind this paper covers some 500 different settings. The experimental results may be normalised as a percentage of the span between the Walrasian and the Pareto outcomes. The same way, results may be expressed as a percentage of the distance between the Nash and the Pareto outcomes. For each and every of the parameters, these two indices make it possible to answer two questions: how far is the market outcome away from the competitive equilibrium? And how good is the Nash prediction? Most importantly, however, the meta-analysis sheds light on how features of the experimental setting interact with each other. Most main effects and many interaction effects are indeed statistically significant.

Keywords: oligopoly, collusion, unilateral effect, experiment

JEL Classification: C91, D21, D43, K21, L13, L41

Suggested Citation

Engel, Christoph, How Much Collusion? A Meta-Analysis on Oligopoly Experiments (December 2006). MPI Collective Goods Preprint No. 2006/27, Available at SSRN: https://ssrn.com/abstract=951160 or http://dx.doi.org/10.2139/ssrn.951160

Christoph Engel (Contact Author)

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Universität Osnabrück - Faculty of Law

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