We propose a model in which mergers exert a more pronounced effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The results help to reconcile theory with...

The findings on the ultimatum game are considered as belonging to the most robust experimental results. In this paper we present a slightly altered version of the mini ultimatum game of Bolton and Zwick (1995). Whereas in the latter exactly equal splits were feasible in our games these were...

Arguing that consumers are the carriers of firms’ reputations, we examine the role of consumer networks for trust in markets that suffer from moral hazard. When consumers are embedded in a network, they can exchange information with their neighbours about their private experiences with...

Merged firms are typically rather complex organizations. Accordingly, me rger has a more profound effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare – improving even if costs are linear. The...

We use a laboratory experiment to investigate whether statements from a governmental institution expressing concerns about price increases trigger such increases by facilitating tacit collusion. Such statements on market conduct are disclosed after an exogenous and unexpected upward cost shock....