Price dynamics and collusion under short-run price commitments

K. Leufkens, R.J.A.P. Peeters

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We consider a dynamic homogeneous oligopoly in which firms set prices repeatedly. Theory predicts that short-run price commitments increase profits and may lead to less price stability. The experiments that we conducted provide support for the first effect and against the second effect when a random ending rule is applied. When a fixed ending rule is applied, we find no significant impact of short-run price commitments on profits and price stability.
Original languageEnglish
Pages (from-to)134-153
Number of pages20
JournalInternational Journal of Industrial Organization
Volume29
Issue number1
DOIs
Publication statusPublished - 1 Jan 2011

Cite this