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Journal of Competition Law and Economics Advance Access originally published online on August 30, 2007
Journal of Competition Law and Economics 2007 3(4):491-549; doi:10.1093/joclec/nhm016
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© The Author (2007). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

HOW MUCH COLLUSION? A META-ANALYSIS OF OLIGOPOLY EXPERIMENTS

Christoph Engel *

Oligopoly has been among the first topics in experimental economics. Over half a century, some 150 papers have been published. Each individual paper was interested in demonstrating one effect, but in order to do so, experimenters had to specify many more parameters. Thus they have generated a huge body of evidence, untapped so far. This meta-analysis makes this evidence available. More than 100 of the papers lend themselves to calculating an index of collusion. The database behind this paper covers some 500 different settings. The experimental results may be normalized as a percentage of the span between the Walrasian and the Pareto outcomes. In the same way, results may be expressed as a percentage of the distance between the Nash and the Pareto outcomes. For each and every one of the parameters, these two indices make it possible to answer two questions: How far is the market outcome away from the competitive equilibrium? And how good is the Nash prediction? Most importantly, however, the meta-analysis sheds light on how features of the experimental setting interact with each other. Most main effects and many interaction effects are indeed statistically significant.

* Director, The Max Planck Institute for Research on Collective Goods, Bonn, Germany. E-mail: engel{at}coll.mpg.de. I am indebted to Werner Güth, Reinhard Selten, Martin Hellwig, Martin Beckenkamp, Thomas Gaube, and Frank Maier-Rigaud for their advice, and to Lena Heuner for her help in tracing old papers.


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