Price communications in a multi-market context: An experimental investigation

This experiment assesses the effects of nonbinding price communications in a multimarket, posted-offer environment. In half of the ten sessions, three symmetric sellers continuously submitted nonbinding prices for two minutes prior to posting final binding prices. In the remaining sessions sellers posted only binding prices. Competitive prices were observed infrequently in either treatment, but prices were persistently higher when communications were possible. The way that communications affect performance is unclear. With or without communications, high prices appear to be more a consequence of some sellers supporting the defections of others, than of a developed ''language of conspiracy''.