Pure numbers effects, market power, and tacit collusion in posted offer markets

This paper studies the effects of seller concentration and static market power on tacit collusion in extensively repeated laboratory posted-offer markets. Contrary to the implications of some earlier research, we find that tacit collusion does not become pervasive with extensive repetition. In a ‘strong no-power’ design persistently competitive outcomes are observed in markets with three or four sellers. Even duopolies are frequently competitive in this design. Unilateral market power raises prices, as predicted. However, static Nash predictions fail to organize outcomes across power treatments, because tacit collusion moves inversely with concentration. Excess capacity appears to explain observed tacit collusion levels.     

垂直差异化与合谋稳定性关系分析

市场行为中的默契合谋能使企业获得超额利润,现存的关于生产同质品和差异化产品的经验性研究经常能发现默契合谋的证据.在现实经济的默契合谋行为中,不同的成本结构适用于不同的经济环境或者不同的行业、产业分析,也直接影响着合谋和背离合谋所得的利润,对合谋稳定性有着重要的影响.在垂直差异化的不同成本(固定成本、可变成本)结构下,企业参与竞争的不同竞争类型(古诺竞争和伯川德竞争)对合谋稳定性的影响也是有差异的.     

Capacity constraints, mergers and collusion

The objective of this paper is two-fold: to contribute to the analysis of tacit collusion in Bertrand supergames with (asymmetric) capacity constraints and, from a more applied perspective, to bring a new light on merger analysis and provide useful guidelines for competition policy, taking into account dynamic aspects of competition. It is well-known that capacity constraints affect tacit collusion, as they limit both incentives to deviate (e.g., to undercut rivals) and retaliation possibilities. However, most studies have so far focused on symmetric situations, where all firms have the same capacity, which leads to ambiguous and unintuitive results and also considerably limits the scope of application. Studying asymmetric situations makes it possible to analyse the impact of changes in the distribution of these capacities (expansions, but also mergers, split-offs, transfers, etc.) and to provide guidelines for competition policy and particularly for merger policy. These guidelines, which differ substantially from those inspired by more static analyses, such as the Herfindahl or other standard concentration tests, are applied to a famous merger that took place in the French bottled water market, the Nestlé-Perrier merger case.     

Trade liberalization,forward‐looking firms,and welfare

We set up an oligopolistic model with two exporting firms selling to a third market to investigate the welfare implications of trade liberalization when the exporting firms are forward‐looking. The results show that with cost asymmetry trade liberalization encourages the exporting firms to engage in tacit collusion, which may not only be detrimental to the domestic welfare, but also to the consumer surplus of the importing country. Moreover, we find that tacit collusion is less sustainable if the government of the importing country imposes a lower (higher) tariff on the more (less) efficient exporting firm. If a nonforward‐looking or a forward‐looking cost‐efficient domestic firm exists in the importing country, then trade liberalization also encourages tacit collusion.     

垄断竞争的电信业定价策略研究

讨论垄断竞争条件下电信业定价策略,对理解电信运营商的竞争行为、制定电信业竞争政策有重要的意义。本文将呼叫外部性引入模型,考察了呼叫方内部化接听方效用条件下企业定价策略,从而扩展了目前理论内容和结论。研究表明：当呼叫方内部化接听方的效用时,在线性定价条件下,电信运营商仍然会通过提高接入费进行合谋;在非线性定价条件下,由于电信运营商可以利用固定费进行市场份额的争夺,电信运营商不再有利用接入费进行合谋的动机;在基于终接网络的价格歧视条件下,当消费者接听效用接近于呼叫效用时,电信运营商将会通过制定无穷大的呼叫异网价格来获取更大的市场份额,因此网络联接发生了中断。     

Tacit collusion in housing markets: the case of Santiago,Chile

In this article, using a detailed micro-database from Santiago, Chile, the potential existence of tacit collusion in housing markets is investigated. In order to perform the test, Santiago’s housing market is split into four different submarkets using hedonic price analysis and household’s socioeconomics characteristics. Then, using a GMM panel data model, regressions are run for each submarket, correlating industry’s markups with the aggregate level of activity. The main finding is that low and middle income submarkets present higher average markups and a pro-cyclical behaviour. This finding is consistent with a market where participants do not face capacity constraints and behave strategically to sustain tacit collusion during increasing demand periods.     

Cartel size and collusive stability with non-capitalistic players

A well established belief both in the game-theoretic IO and in policy debates is that market concentration facilitates collusion. We show that this piece of conventional wisdom relies upon the assumption of profit-seeking behaviour, for it may be reversed when firms pursue other plausible goals. To illustrate our intuition, we investigate the incentives to tacit collusion in an industry formed by labour-managed (LM$LM$) enterprises. We characterise the perfect equilibrium of a supergame in which LM$LM$ firms play an infinitely repeated Cournot game under grim trigger strategies. We show that the critical threshold of the discount factor above which collusion is stable (i) is lower in the LM$LM$ industry than in the capitalistic one; (ii) monotonically decreases with the number of firms.     

同质市场中产量匹配惩罚策略下的默契合谋

本文研究了同质产品市场中产量匹配惩罚策略下的默契合谋。我们得到的结论如下:(1)同质市场中的默契合谋是可能的;(2)垄断产量不可能通过合谋实现;(3)与纳什回归惩罚策略相比,合谋有可能更加困难,也有可能同等容易。我们将得到的结论与Lu and Wright(2010)所研究的价格匹配惩罚策略下的默契合谋进行了比较,并给出了一个线性需求函数的例子。     

The Impact of a Goods and Services Tax on Product Market Competition

This paper explores the effects of a goods and services tax on the degree of competition in an oligopolistic industry and identifies a new mechanism through which the tax influences product market competition. The analysis focuses upon the effects of the tax in a concentrated industry and it is demonstrated that there exist circumstances under which the tax may promote competition by rendering tacit collusion more difficult.     

Tacit collusion in repeated auctions

This paper considers the question of tacit collusion in repeated auctions with independent private values and with limited public monitoring. McAfee and McMillan show that the extent of collusion is tied to the availability of transfers. Monetary transfers allow cartels to extract full surplus. A folk theorem proved by Fudenberg et al. (Econometrica 62 (1994) 997-1039) shows that transfers of future payoffs are almost as good if players are patient and communicate before auctions. We ask how the scope of collusion is affected if players dispense with explicit communication and their monitoring is limited. Collusion better than bid rotation is still feasible, but full surplus cannot be extracted. This constraint becomes less severe with more players and large cartels can become asymptotically efficient even with very limited monitoring.     

“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments

We report on an experiment conducted to evaluate the effects of varying the way in which market information is presented to participants in laboratory Cournot duopolies. We find that the most standard variations, which are the use of a profit table or a profit calculator, yield indistinguishable performance. However, the addition of a best-response option to the profit calculator tends to increase aggregate output to the Cournot level and decrease the incidence of tacit collusion.     

Tacit Collusion and Non–uniform Prices

This article examines the possibility of building a tacit agreement between price–setters that yields non–uniform pricing. It is shown that firms with market power may restrict competition not only by alternating between periods of high prices and low prices (Green and Porter (1984), Rotemberg and Saloner (1986)), but also by always charging different prices and taking turns in being the monopolist. In contrast with the existing literature, price variability is not due to imperfect monitoring, stochastic demand or short–run pricing rigidity but it is a pure supply side effect. The author provides the necessary conditions to have collusion with non–uniform pricing, and shows that the latter dominates a fixed price solution. In terms of competition policy this result confirms that no price parallelism is not, per se , a signal of no collusion.     

The pivotal mechanism revisited: some evidence on group manipulation

This paper studies the vulnerability of the pivotal mechanism with respect to manipulation by groups. In a lab experiment, groups decide on the implementation of various alternatives, some of which imply opposite interests for the two subgroups. We investigate the occurrence of tacit and explicit collusion by allowing for communication within subgroups in one treatment and prohibiting it in another. Even though all agents’ preferences are common knowledge and there exists a simple symmetric collusive strategy for one subgroup, we find little evidence for tacit collusion. Only when explicit communication is allowed, collusion is established. A behavioral model using quantal response equilibrium in which subjects have beliefs over the correlation of errors of same-type subjects helps explain the main features of our data.     

电信产业默契合谋的存在性与稳定性分析

合谋是产业组织理论研究的重要问题之一,它易出现于寡头垄断行业中。合谋的出现会降低消费者剩余,对整个社会福利造成损失,因此应当尽量去除。电信产业是一个典型的寡头垄断产业,电信运营商之间具有很强的相互依赖性,易出现合谋,特别是默契合谋。所谓默契合谋是指寡头垄断厂商以一种纯粹“非合作”的方式进行的合作。本文首先应用古诺模型对电信产业默契合谋的存在性进行理论分析,并举出实例予以佐证。在此基础上,从理论上进一步证明了电信产业默契合谋具有不稳定性,指出运营商之间的合谋是一个“囚徒困境”。进而应用冷酷策略,研究了电信产业默契合谋维持的激励条件,并从成本对称性、市场信息透明度、产品差异性、卖方集中度和技术进步程度等方面分析了影响电信产业默契合谋的相关因素。并指出现实中,默契合谋和价格竞争往往是交替出现的。     

R&D COOPERATION BETWEEN IMPATIENT RIVALS

We analyse R&D cooperation between product‐market competitors within a repeated‐game framework with imperfect monitoring. When firms are patient enough, R&D cooperation is attainable without product‐market collusion. However, if firms are less patient, we show that collusion in the product market is necessary to sustain R&D cooperation. Moreover, consumers can be better off when collusion is allowed in this case.     

PRODUCT QUALITY,REPUTATION, AND MARKET STRUCTURE*

In a repeated game in which firms simultaneously choose price and product quality, but quality is observed only after consumption takes place, equilibria exhibiting high quality may exist in oligopoly markets even when the low‐quality one is a unique equilibrium outcome in monopoly and competitive markets. Oligopolists can sustain high quality through the threat of both a loss of reputation and a breakdown in tacit collusion. While we abstract from other reasons that market structure might affect product quality, we show that the inverted‐U shaped relationship between feasible quality and market structure is robust to several generalizations of the model.     

Tacit collusion with imperfect monitoring in the Canadian manufacturing industry: an empirical study

This article undertakes a cross-sectoral analysis of a salient empirical implication of the model of tacit collusion advanced by Abreu, Pearce, and Stachetti (1986). Specifically, we assess the prevalence of a first-order Markovian process for alternating between price wars and collusive periods through nonparametric tests. The analysis focuses on 30 different industries in Canada. The evidence provides weak support for optimal collusion in one industry, which is consistent with the idea that such kind of collusive arrangements is unusual, or, if collusion is all too common, that price wars as deviations from collusion are rare.     

Debt as a collusive device in an oligopoly supergame

This paper explores the impact of debt holdings on the output decisions of firms in an oligopoly supergame with stochastic demand fluctuations. It is demonstrated that when perfect collusion is not feasible then there exist circumstances in which increased debt holdings may facilitate tacit collusion. This occurs because higher debt levels act as a credible commitment device which lowers the payoffs accruing to a firm when it defects from the tacitly collusive equilibrium. It is further shown that in these circumstances firms may have an incentive to hold debt for strategic purposes which promote collusion.     

The impact of experience on prices and profits in experimental duopoly markets

Experimental posted price duopoly markets, wherein differentiated products were sold under conditions of incomplete information, were designed to explore the impact of experience on prices and profits. Two types of markets were run simultaneously. One type involved participants with previous experience in similar markets, while the other involved inexperienced subjects facing the same pricing decisions as their experienced counterparts. Probit analysis of the resulting data indicated significant relationships between experience and achieving equilibria predicted by tacit collusion. The results reinforce the growing realization that experience may be an important consideration in experimental tests of static market equilibria models.     

Transparency and cooperation in repeated dilemma games: a meta study

We use data from experiments on finitely repeated dilemma games with fixed matching to investigate the effect of different types of information on cooperation. The data come from 71 studies using the voluntary contributions paradigm, covering 122 data points, and from 18 studies on decision-making in oligopoly, covering another 50 data points. We find similar effects in the two sets of experimental games. We find that transparency about what everyone in a group earns reduces contributions to the public good, as well as the degree of collusion in oligopoly markets. In contrast, transparency about choices tends to lead to an increase in contributions and collusion, although the size of this effect varies somewhat between the two settings. Our results are potentially useful for policy making, because they provide guidance on the type of information to target in order to stimulate or limit cooperation.