A Method to Identify Maverick Firms : From the Perspective of Anti-Coordination Effects
This paper develops a method to identify maverick firms in an industry from the perspective of anti-coordination effects. The method is based on the difference between the Cournot competitive price and collusive price: when there is a maverick firm that hinders coordination, the price of the colluding firms should be close to the competitive price, and the price should be a negative function of the number of colluding firms. By using ticket-level data from the first quarter of 2000 to the fourth quarter of 2004, I study the relationship between the number of competitors and price in the absence and the presence of a potential maverick: Southwest airlines. My findings reveal that colluding firms' prices are more sensitive to other colluding firms' entry and exit behavior when Southwest is preexisting. Such an effect is greater on the high percentile price of colluding firms, and larger initial market share of Southwest causes greater anti-coordination effects. My finding also suggests that maverick status could change over time
Year of publication: |
[2023]
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Authors: | Zou, Yanchi |
Publisher: |
[S.l.] : SSRN |
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