Collusion and Market Power in Experimental Auction Markets

iN THIS PAPER WE PRESENT DOUBLE-AUCTION AND POSTED OFFER EXPERIMENTS IN WHICH SOME LOW-COST SELLES HAVE THE OPPORTUNITY OF EXERCISING MARKET POWER BY WITHOLDING UNITS FOR SALE THUS INCREASING THE MARKET PRICE. We propose the combined use of accelerted decay and asymptotic root modelswhich allow us to discriminate between competitive and non competitive behavior,and, for non competitive behavior, between tacit collusion and unilateral market power. Our analysis confirms the existence of unilateral market power and tacit collusion in posted offer markets but the same hypothesis is rejected in the four double auction experiments