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A Classroom Experiment on Oligopolies

Published online by Cambridge University Press:  28 April 2015

Robert G. Nelson  and
Richard O. Beil Jr.
Robert G. Nelson
Affiliation:
Department of Agricultural Economics and Rural Sociology
Richard O. Beil Jr.
Affiliation:
Department of Economics, Auburn University, Alabama
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Abstract

This experiment demonstrates principles of decision-making in dynamic oligopolies, especially the difficulties in forming and maintaining cartels. As an illustration of firm behavior under imperfect competition, the game distinguishes between procedurally rational choices and substantively rational decisions in the context of collusive, Cournot, and competitive equilibria. The paper discusses results from an actual classroom exercise and suggests some additional variations in institutional details. Instructions for students and a spreadsheet program for producing payoff tables are provided in the appendices.

Keywords

teachingexperimental economicsoligopoly
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 27 , Issue 1 , July 1995 , pp. 263 - 275
Copyright
Copyright © Southern Agricultural Economics Association 1995

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