Testing forbearance experimentally: Duopolistic competition of conglomerate firms

Arbeitspapier

Like Feinberg and Sherman (1985) and Phillips and Mason (1992) we test experimentally whether conglomerate firms, i.e., firms competing on multiple structurally unrelated markets, can effectively limit competition. Our more general analysis assumes differentiated rather than homogeneous products and distinguishes strategic substitutes as well as complements to test this forbearance hypothesis. Rather than only a partners design we also explore a random strangers design to disentangle effects of forbearance and repeated interaction. Surprisingly, conglomerate firms do not limit competition, they rather foster it. More in line with our expectations we find more cooperation in complement markets than in substitute markets and also more cooperation in a partners than in a strangers matching.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2010,043

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Monopolization; Horizontal Anticompetitive Practices
• Subject: Experiment ; Forbearance ; Competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Güth, Werner ; Häger, Kirsten ; Kirchkamp, Oliver ; Schwalbach, Joachim
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (where): Jena
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/36672
• Last update: 10.03.2025, 11:43 AM CET