Template-Type: ReDIF-Paper 1.0
Author-Name:  Kyle Hampton
Author-Name-First: Kyle
Author-Name-Last: Hampton
Author-Email:  afkh2@uaa.alaska.edu 
Author-Workplace-Name: Department of Economics, University of Alaska Anchorage
Author-Name:  Katerina Sherstyuk 
Author-Name-First: Katerina 
Author-Name-Last: Sherstyuk 
Author-Email:  katyas@hawaii.edu 
Author-Workplace-Name: Department of Economics, University of Hawaii at Manoa
Title:  Demand Shocks, Capacity Coordination and Industry Performance: Lessons from Economic Laboratory 
Abstract:  Antitrust exemptions granted to businesses under extenuating circumstances are often justified by the argument that they benefit the public by helping producers adjust to otherwise difficult economic circumstances. Such exemptions may allow firms to coordinate their capacities, as was the case of post-September 11, 2001 antitrust immunity granted to Aloha and Hawaiian Airlines. We conduct economic laboratory experiments to determine the effects of explicit capacity coordination on oligopoly firms' abilities to adjust to negative demand shocks and on industry prices. The results suggest that capacity coordination speeds the adjustment process, but also has a clear pro-collusive effect on firm behavior. 
Creation-date: 2010
File-URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201009.pdf
File-Format: Application/pdf
Classification-JEL: C92, L13
Keywords: 
Publication-Status: 
Number: 2010-09
Handle: RePEc:ala:wpaper:2010-09