Abstract
In this experiment, we analyze whether price ceilings can have a collusive effect in laboratory markets. Our main interest is the focal-point hypothesis which says that a price ceiling may facilitate tacit collusion and lead to higher prices because it resolves a coordination problem inherent to collusion. Our results reject the focal-point hypothesis. Markets with price ceilings have lower prices than markets with unconstrained pricing. The static Nash equilibrium predicts the data accurately.
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