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Estimating Dynamic Games of Oligopolistic Competition: An Experimental Investigation

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  • Tobias Salz
  • Emanuel Vespa
Abstract
We evaluate dynamic oligopoly estimators with laboratory data. Using a stylized en-try/exit game, we estimate structural parameters under the assumption that the data are generated by a Markov-perfect equilibrium (MPE) and use the estimates to predict counterfactual behavior. The concern is that if the Markov assumption was violated one would mispredict counterfactual outcomes. The experimental method allows us to compare predicted behavior for counterfactuals to true counterfactuals implemented as treatments. Our main finding is that counterfactual prediction errors due to collusion are in most cases only modest in size.

Suggested Citation

  • Tobias Salz & Emanuel Vespa, 2020. "Estimating Dynamic Games of Oligopolistic Competition: An Experimental Investigation," NBER Working Papers 26765, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26765
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    Cited by:

    1. Karp, Larry & Sakamoto, Hiroaki, 2021. "Sober optimism and the formation of international environmental agreements," Journal of Economic Theory, Elsevier, vol. 197(C).
    2. N. M. Rozanova, 2021. "Methodological Issues of Modern Competition Policy," Studies on Russian Economic Development, Springer, vol. 32(5), pages 492-498, September.
    3. Emanuel Vespa & Taylor Weidman & Alistair J. Wilson, 2021. "Testing Models of Strategic Uncertainty: Equilibrium Selection in Repeated Games," Papers 2101.05900, arXiv.org.
    4. Jose Miguel Abito & Cuicui Chen, 2021. "How much can we identify from repeated games?," Economics Bulletin, AccessEcon, vol. 41(3), pages 1212-1222.

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    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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