Information frictions and market power: A laboratory study

• 成果类型: Article
• 署名作者: Bayona, Anna; Brandts, Jordi; Vives, Xavier
• 署名单位: Universitat Ramon Llull; Escuela Superior de Administracion y Direccion de Empresas (ESADE); Consejo Superior de Investigaciones Cientificas (CSIC); CSIC - Institut d'Analisi Economica (IAE); Barcelona School of Economics; University of Navarra; IESE Business School
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2020.04.014
• 发表日期: 2020
• 页码: 354-369
• 关键词: Supply function competition; private information; Wholesale electricity market

摘要

In a laboratory experiment with supply function competition and private information about correlated costs we study whether cost interdependence leads to greater market power in relation to when costs are uncorrelated in the ways predicted by Bayesian supply function equilibrium. We find that with uncorrelated costs observed behavior is close to the theoretical benchmark. However, with interdependent costs and precise private signals, market power does not raise above the case of uncorrelated costs contrary to the theoretical prediction. This is consistent with subjects not being able to make inferences from the market price when costs are interdependent. We find that this effect is less severe when private signals are noisier. (C) 2020 Elsevier Inc. All rights reserved.