In cooperation with Ewing, Bradley T. / Hoffman, Jim
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Most Downloaded Articles
- Valuation of Cash Flows with Time-Varying Cessation Risk by Saha, Atanu and Malkiel, Burton G.
- Approximate Firm Valuation with Operating Leases by Jennergren, L. Peter
- Computing Lost Profits in Business Interruption Litigation: A General Model by Stephenson, Stanley/ Macpherson, David A. and Prakash-Canjels, Gauri
- Fundamentals of Functional Business Valuation by Matschke, Manfred Jürgen/ Brösel, Gerrit and Matschke, Xenia
- Business Valuation Basics for Attorneys by Dukes, William P.
An Experimental Examination of Market Concentration and Capacity Effects on Price Competition
1Texas Tech University
1East Carolina University and National Oceanic Atmospheric Administration
Citation Information: Journal of Business Valuation and Economic Loss Analysis. Volume 5, Issue 1, Pages –, ISSN (Online) 1932-9156, DOI: 10.2202/1932-9156.1093, April 2010
- Published Online:
This research examines the comparative impact of market concentration and excess capacity on the performance of posted-offer experimental markets. We report the results of panel data analysis of 35 markets with or without excess capacity involving two, three, or four sellers. We find that sellers can sustain higher prices in more concentrated laboratory markets. Higher levels of excess capacity lead to lower laboratory market prices supporting the notion that excess capacity reduces the ability of firms to collude as opposed to the view that excess capacity is a trigger strategy punishment that sustains collusion.