Bertrand Competition & Collusion (Module Guide)

Each student acts as a firm engaged in a duopolistic Bertrand competition for selling course notes. Each pair of students interacts across five rounds of play. In each round, players must simultaneously decide on a price to charge for course notes in the current round. The firm that posted the lowest price receives all of

Each student acts as a firm engaged in a duopolistic Bertrand competition for selling course notes. Each pair of students interacts across five rounds of play. In each round, players must simultaneously decide on a price to charge for course notes in the current round. The firm that posted the lowest price receives all of the sales for that round.

Each unit of course-notes costs $\$2$ to produce ($MC = \$2$). The market demand for course notes is given by $Q(P)=100(36-2P)=3600-200P$. The Nash Equilibrium price in a Bertrand duopoly competition is $P=MC=\$2$. At this price, the total market quantity is $Q=3200$ and is split evenly between the two firms, $q_1=q_2=1600$ . Each firm earns zero profit in equilibrium.

The first game in this module is a baseline Bertrand game. In the second game chat and indefinite repetition are enabled to facilitate collusive arrangements. This should result in higher prices and lower consumer welfare.

  • Run the Open Session for Students Survey.
  • Have students login
  • [Minutes 0-4] Review Instructions, ideally by projecting video
  • [Minutes 4-8] Run Instruction Comprehension Survey
  • [Minutes 8-12] Run the Five-Round Game
  • [Minutes 12-14] Run the Relection Survey
  • [Minutes 14-19] Review Results
  • [Minutes 19-25] Run the Indefinitely Repeated Game with Chat
  • [Minutes 25-27] Review Results
  • [Minutes 27-30] Final Reflection Survey
  • [Variable] Open Discussion
  • [Variable] MobLab Experience Survey
    • At the end of the module please administer our MobLab Experience Survey. You can set the game duration to be 24 hours which allows students ample time to complete the survey outside of class.

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