The theory of industrial organization has experienced an impressive boom by using the methods of (non-cooperative) game theory. The conclusions depend, however. crucially on subtle details of the market decision processes about which there exist no or little empirical information. Studies of...

In the heterogeneous experimental oligopoly markets of this paper, sellers first choose capacities and then prices. In equilibrium, capacities should correspond to the Cournot prediction. In the experimental data, given capacities, observed price setting behavior is in general consistent with...