We study a major new entry in the French mobile telecommunications market, followed by introduction of fighting brands three incumbents. Using an empirical oligopoly model, we find that incumbents’ brand strategies are difficult to rationalize as unilateral best responses. Instead, their consistent with breakdown tacit semi-collusion: before entry, incumbents could successfully coordinate on re...

We conduct experiments testing the relationship between excess capacity and pricing in repeated Bertrand-Edgeworth duopolies and triopolies. We systematically vary the experimental markets between low excess capacity (suggesting monopoly) and no capacity constraints (suggesting perfect competition). Controlling for the number of firms, higher production capacity leads to lower prices. However, ...

I show that as long as the stock market has perfect foresight, profits are distributed as dividends, and incentives are paid more than once or are deferred, stock-related compensation packages are strong incentives for managers to support tacit collusive agreements in repeated oligopolies. The stock market anticipates the losses from punishment phases and discounts them on stock prices, reducin...

We compare experimentally two contest designs. In the between-group design (BGD), cohorts compete with one another in stage 1 and a single cohort is then advance to stage 2. In stage 2, members of this cohort compete for a single prize. In the withingroup design (WGD), the order of the competition is reversed. Our findings support the theoretical conclusion that the WGD is superior to BGD in ge...

In this model, insurance offering a choice of hospitals is valued because consumers are uncertain which hospital they will prefer ex post. A competitive insurance market facilitates tacit price collusion between hospitals; high margins induce hospitals to compete for customers through overinvestment in quality. Incentives may exist to lock in market share via managed-care plans with less choice...

Exchange of patents between firms increasingly influence competition. Such cross-licensing deals have traditionally raised antitrust concerns, since they can be used to control market shares and prices, and create entry barriers. We argue that cross-licensing is a device to establish multimarket contact and is likely to raise antitrust concerns only in so far as multimarket contact does. Since ...

This paper reports the results of a series of posted-offer experiments designed to examine the effects of static market power on prices, when other factors such as excess supply, the number of sellers, and dynamic incentives are held constant. Static market power results in a dramatic price increase in posted-offer triopolies with complete demand information. The effects of market power are not...

Local retail gasoline markets offer a relatively low cost opportunity to test a number of hypotheses from the industrial organization literature regarding the interdependence of pricing choices. Is there tacit collusion among retailers? Or does the strong correlation of prices represent the natural workings of a highly competitive market (i.e. the law of one price)? Is there evidence of price l...