Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Friday, March 12, 2010

Advance Production, Inventories and Market Power: An Experimental Investigation

Posted by D. Daniel Sokol

Douglas D. Davis (Department of Economics, VCU School of Business) has a paper on Advance Production, Inventories and Market Power: An Experimental Investigation.

ABSTRACT: This paper reports an experiment conducted to assess the effects of alterations in production conditions and product durability on market power in Bertrand-Edgeworth duopolies. Experiment results indicate that advance production increases market power in the sense that mean transaction prices increase relative to static Nash equilibrium predictions for a baseline market. In a similar way, a simple inventory option reduces market power. We also find that both advance production and inventory carryover undermine a strong tendency toward tacit collusion observed in our baseline duopoly markets.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/03/advance-production-inventories-and-market-power-an-experimental-investigation-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef01310f67c98e970c

Listed below are links to weblogs that reference Advance Production, Inventories and Market Power: An Experimental Investigation :

Comments

Post a comment