Wholesale Competition, Open Access Regulation and Tacit Collusion: Experimental Evidence
We consider the market scenario where wholesale access for a non integrated reseller is provided competitively by two vertically integrated firms. In a continuous time economic laboratory experiment with both student and expert participants we compare market outcomes under different modes of wholesale competition as well as under an open access regulation preventing a margin squeeze. We find that wholesale competition can facilitate tacit collusion, which yields wholesale and retail prices even above the monopoly level. However, we show that a simple price commitment rule can substantially reduce tacit collusion. Moreover, we do not find evidence that margin squeeze regulation benefits consumers.