An Empirical Test of the Effects of Excess Capacity in Price Setting, Capacity-Constrained Supergames
In a multi-period game, industry excess capacity may act to deter firms from cheating on a non-cooperative oligopoly price. A model is developed that translates the deterrrent influence of excess capacity into predictions about the relationship between excess capacity and oligopoly price-cost margins. The model is tested with time-series data from the U.S. aluminum industry. Results are consistent with those predicted by the model.
||An Empirical Test of the Effects of Excess Capacity in Price Setting, Capacity-Constrained Supergames
International Journal of Industrial Organization (1989)
v. 7 iss. 2 pp. 231-242
||Rosenbaum, David I
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|Rosenbaum, David I||Economics