Essays in experimental industrial organization: How communication and information affect market outcomes
23 November 2016
Number of pages
978 90 5170 983 2
Faculty of Economics and Business (FEB)
Amsterdam School of Economics Research Institute (ASE-RI)
This thesis consists of three independent essays that use laboratory experiments to address a number of industrial organization
questions. In particular, it studies the role of communication and information revelation in market interactions. Chapters
2 and 3 focus on the question of how communication between firms affects the way they compete in the market. By introducing
communication in our experimental markets, my analysis diverges from traditional industrial organization conventions in two
ways. First, in Chapter 2 we expect (and find) different outcomes in markets with and without communication. This contrasts
with the standard model of collusion that does not distinguish between implicit and explicit collusion so that its predictions
do not depend on communication possibilities. In Chapter 3, I introduce communication in such a way that firms individually
can decide whether or not to communicate with other firms in the same market, i.e., whether they want to be part of a cartel.
In this way, partial cartels can form endogenously, which is precluded in traditional oligopoly models where cartels are assumed
to be all-inclusive. Finally, I study the effect of information revelation in market outcomes. In Chapter 2, I analyze the
impact of information about other firms’ actions and outcomes on market prices in an oligopoly setting. In Chapter 4, I examine
the effect of revealing information about the outcome of an auction to an external party on bidding behavior and auction revenue.
I do so in a setting where the external party’s estimates of bidders’ values influence bidders’ payoffs.
Research conducted at: Universiteit van Amsterdam
Series: Tinbergen Institute research series 676
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