Predation, asymmetric information and strategic behavior in the classroom:an experimental approach to the teaching of industrial organization

Classroom market experiments can complement the theoretical orientation of standard industrial organization courses, This paper describes various expe riments designed for such courses, and presents details of a multi-market g ame with entry and exit. In this experiment incumbents have a cost advantag e in their 'home' markets, and mobile firms decide which market to enter. A fter entry decisions are made, firms choose prices and quantities to offer for sale. Predatory pricing is possible with this setup, and the experiment can be used to motivate discussions of monopoly, competition, entry, and e fficiency. Other classroom experiments with an industrial organization focu s are surveyed. (C) 2000 Elsevier Science B.V. All rights reserved. JEL cla ssification: C72; C92.