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Field
Primary Outcomes (Explanation)
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Before
BELIEFS: we will use three differents measures of the belief of cooperation q (which is between 0 and 1) of the firms' competitors:
1.beliefs about the highest possible prices (which offers a very conservative measure of the belief of cooperation about competitors)
2.beliefs about higher or equal prices set by competitors at the actual period compared to last period's market price
3. All prices set above the Nash Equilibrium (common measure of collusion in the literature). This will be our main measure to analyze the changes in beliefs.
Each firm will give its estimation about the action of each competitor separately. We elicit the whole distribution of possible prices. To comply to our model that assumes that the belief q about its two competitors is the same, we will take the minimum, the maximum and the average of the two elicited beliefs. Finally, we will compute the change of beliefs between the first period after intervention and the last period before intervention. After this period, we will analyze the beliefs during the end of the 5th supergame given the intervention.
PRICES: Since the set of possible prices changes (due to the cost shock and the related change in reservation price), we will use a Diff-and-Diff regression to measure the impact of each treatment separately. Our main analysis will be on individual submitted prices with Block bootstrapped standard errors in brackets, where the blocks are the matching groups. Bootstrap with 9999 repetitions
DEGREE OF PROFITABILITY: The degree of profitability is a standardized measure of the (gross) mark-up of a firm. It allows us to compare the changes before and after the treatment directly. We will perform regressions correcting for multiple hypotheses (Roman-Wolf correction) panel data regressions.
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After
BELIEFS: we will use three differents measures of the belief of cooperation q (which is between 0 and 1) of the firms' competitors:
1.beliefs about the highest possible prices (which offers a very conservative measure of the belief of cooperation about competitors)
2.beliefs about higher or equal prices set by competitors at the actual period compared to last period's market price
3. All prices set above the Nash Equilibrium (common measure of collusion in the literature). This will be our main measure to analyze the changes in beliefs.
Each firm will give its estimation about the action of each competitor separately. We elicit the whole distribution of possible prices. To comply to our model that assumes that the belief q about its two competitors is the same, we will take the minimum, the maximum and the average of the two elicited beliefs. Finally, we will compute the change of beliefs between the first period after intervention and the last period before intervention. After this period, we will analyze the beliefs during the end of the 5th supergame given the intervention.
PRICES: Since the set of possible prices changes (due to the cost shock and the related change in reservation price), In the first version of this pre-registration document, we stated that we will use a Diff-and-Diff regression to measure the impact of each treatment separately. At this time, we did not think about an IV speicifcation where the random allocation to treatments would solve the endogeneity between prices and beliefs. The IV specification is the one you find in our manuscript. Our main analysis will be on individual submitted prices with Block bootstrapped standard errors in brackets, where the blocks are the matching groups. Bootstrap with 9999 repetitions
DEGREE OF PROFITABILITY: The degree of profitability is a standardized measure of the (gross) mark-up of a firm. It allows us to compare the changes before and after the treatment directly within markets. We will perform regressions correcting for multiple hypotheses (Roman-Wolf correction) OLS clustered regressions.
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