Hostname: page-component-586b7cd67f-2plfb Total loading time: 0 Render date: 2024-11-29T13:47:27.587Z Has data issue: false hasContentIssue false
  • English
  • Français

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
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alger, D. “Laboratory Tests of Equilibrium Predictions with Disequilibrium Data.” Rev. Econ. Studies 54(1987): 105–146.CrossRefGoogle Scholar
Babb, E.M. and Eisgruber, L.M.. Management Games for Teaching and Research. Chicago: Educational Methods, Inc., 1966.Google Scholar
Battalio, R.C. and Phillips, O.R.. “Representing a Duopolist's Choice Strategy with Pay-Off Tables.” mimco, Dept. of Economics, Texas A&M Univ., College Station, TX, 1985.Google Scholar
Beil, R.O. Jr. “Collusive Behavior in Experimental Oligopoly Markets.” PhD dissertation, Texas A&M Univ. 1988.Google Scholar
Brock, J.R. “A Public Goods Experiment for the Classroom.” Econ. Inquiry 29(1991):395–401.CrossRefGoogle Scholar
Carlton, D.W. and Pcrloff, J.M.. Modern Industrial Organization. Glenview, IL: Scott, Foresman and Co., 1990.Google Scholar
Curtis, S. “The Use of a Business Game for Teaching Farm Business Analysis to High School and Adult Students.” Amer. J. Agr. Econ. 50(1968): 1025–1033.CrossRefGoogle Scholar
Dahlgran, R.A. “Management Simulators: A Tool for Fostering Experience-Based Learning of Agribusiness Management Concepts.” Agribusiness 3(1987):403–412.3.0.CO;2-#>CrossRefGoogle Scholar
Davis, D.D. and Holt, C.A.. Experimental Economics. Princeton, NJ: Princeton Univ. Press, 1993.CrossRefGoogle Scholar
DeYoung, R. “Market Experiments: The Laboratory versus the Classroom.” J. Econ. Education 24(1993):335–351.CrossRefGoogle Scholar
Dolbear, F.T., Lave, L.B., Bowman, G., Lieberman, A., Prescott, E., Reuter, F., and Sherman, A.. “Collusion in Oligopoly: An Experiment on the Effect of Numbers and Information.” Quarterly J. Econ. 82(1968):240–259.CrossRefGoogle Scholar
Eidman, V., Jose, H., Roush, C, and Boehlje, M.. A Game For Management Instruction: The Oklahoma Panhandle Farm Version. Oklahoma State Univ. Agr. Exp. Sta. Research Report P-685, May, 1973.Google Scholar
Fackler, P.L.EMP – the Electronic Market Place, mimeo, Dept. Agr. and Res. Econ., North Carolina State Univ., 1993.Google Scholar
Fcinberg, R.M. and Sherman, R.. “Mutual Forbearance under Experimental Conditions.” S. Econ. J. 54(1988):895–993.Google Scholar
Fels, R. “This is What 1 Do, and 1 Like It.” J. Econ. Education 24(1993):365–370.Google Scholar
Fisher, G., Boehlje, M., and Roush, C. A Management Game for Non-Metropolitan Commercial Banks—A Game Manual. Oklahoma State Univ. Agr. Exp. Sta. Research Report P-703, Oct., 1974.Google Scholar
Fouraker, L.E. and Siegel, S.. Bargaining Behavior. New York: McGraw Hill, 1963.Google Scholar
French, N.R. and S.C Turner. “The Introduction of Experimental Economics in the Agricultural Marketing Classroom.” NACTA J. 33(1989):33–36.Google Scholar
Friedman, D. and Sunder, S.. Experimental Methods: A Primer for Economists. New York: Cambridge Univ. Press, 1994.CrossRefGoogle Scholar
Friedman, J.W. “An Experimental Study of Cooperative Duopoly.” Econometrica 35(1967):379–397.CrossRefGoogle Scholar
Gibbons, R.Game Theory for Applied Economists. Princeton, NJ: Princeton Univ. Press, 1992.Google Scholar
Hemenway, D., Moore, R. and Whitney, J.. “The Oligopoly Game.” Econ. Inquiry 25(1987):727–730.CrossRefGoogle Scholar
Holt, C.A. “Industrial Organization: A Survey of Laboratory Research.” in Handbook of Experimental Economics, ed. Roth, A. and Kagel, J., Princeton, NJ: Princeton Univ. Press, forthcoming.Google Scholar
Holt, C.A. “An Experimental Test of the Consistent-Conjectures Hypothesis.” Amer. Econ. Rev. 75(1985):314–325.Google Scholar
Koontz, S.R., Peel, D.S., Trapp, J.N., and Ward, C.E.. Experiential Learning Using a Fed Cattle Market Simulator: The “Packer-Feeder Game.” Oklahoma State Univ. Agr. Exp. Sta. Research Report P-929, Dec, 1992.Google Scholar
Kreps, D. and Scheinkman, J.. “Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes.” Bell J. Econ. 14(1983):326–337.CrossRefGoogle Scholar
Ladd, G.W.Imagination in Research: An Economist's View. Ames, IA: Iowa State Univ. Press, 1987.Google Scholar
Leuthold, J.E. “A Public Goods Experiment for the Classroom.” J. Econ. Education 18(1987):58–65.CrossRefGoogle Scholar
Nelson, J. and Doeksen, G.. “A Simulation Game Teaching Aid for Rural Development.” S. J. Agr. Econ. 1(1975):239–247.Google Scholar
Nelson, R.G. and Beil, R.O. Jr. “Pricing Strategy Under Monopoly Conditions: An Experiment for the Classroom.” J. Agr. and Applied Econ. 26(1994):287–298.CrossRefGoogle Scholar
Plott, C.R., Sugiyama, A.B., and Elbaz, G.. “Economies of Scale, Natural Monopoly, and Imperfect Competition in an Experimental Market.” S. Econ. J. 61 (1994):261–287.Google Scholar
Simon, H.A. “From Substantive to Procedural Rationality.” in Method and Appraisal in Economics, ed. Latsis, S.J., Cambridge, U.K.: Cambridge Univ. Press, 1976.Google Scholar
Spencc, A.M. “Product Selection, Fixed Costs, and Monopolistic Competition.” Rev. Econ. Studies 43(1976):217–235.CrossRefGoogle Scholar
Sulock, J.M. “The Free Rider and Voting Paradox ‘Games’.” J Econ. Education 21(1990):65–69.Google Scholar
Tierney, W.I. Jr. “Students Form Commodity Pool to Learn About the Futures Market.” N. Cent. J. Agr. Econ. 1 1(1989):289–296.Google Scholar
Trapp, J.N. “A Commodity Market Simulation Game for Teaching Market Risk Management.” S. J. Agr. Econ. 21 (1989): 139–147.Google Scholar
Walker, J. “Experimental Economics in the Classroom.” J. Econ. Education 18(1987):51–57.CrossRefGoogle Scholar
Williams, A.W. and Walker, J.M.. “Computerized Laboratory Exercises for Microeconomics Education: Three Applications Motivated by Experimental Economics.” J. Econ. Education 24( 1993):291–315.CrossRefGoogle Scholar