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Rebels without a clue? Experimental evidence on partial cartels

Author

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  • Clemens, Georg
  • Rau, Holger A.

Abstract

This paper provides experimental evidence on the formation of partial cartels with endogenous coordination. Firms face a coordination challenge when a partial cartel is to be formed as every firm is better off if it is not inside the cartel but is a free-riding outsider. We introduce a three-stage mechanism with communication which facilitates the formation of a cartel and respectively allows the formation of a partial cartel. All-inclusive cartels are always formed. We find that partial cartels are frequently rejected out-of-equillibrium if moutside firms profit excessively from the formation of the cartel.

Suggested Citation

  • Clemens, Georg & Rau, Holger A., 2013. "Rebels without a clue? Experimental evidence on partial cartels," DICE Discussion Papers 69, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:69
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    Citations

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    Cited by:

    1. Rau, Holger & Clemens, Georg, 2014. "Do Leniency Policies facilitate Collusion? Experimental Evidence," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100509, Verein für Socialpolitik / German Economic Association.
    2. Clemens, Georg & Rau, Holger A., 2014. "Do leniency policies facilitate collusion? Experimental evidence," DICE Discussion Papers 130, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Odenkirchen, Johannes, 2017. "Pricing Behavior of Cartel Outsiders in Incomplete Cartels," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168309, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Partial Cartels; Coordination; Communication; Experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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