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Delegation and strategic collusion under antitrust policies: An experiment

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  • Kim, Jeong Yeol

Abstract

When firm owners delegate decision-making to managers, such as corporate executives who operate firms directly, a firm's behavior can vary depending on how the owner determines the incentives of the managers. This study employs a lab experiment to investigate the impact of delegation on collusive behavior of firms in a situation where antitrust policies exist. The experiment highlights the following two key findings: (i) Firms form cartels strategically, alternating their collusive and competitive output to evade antitrust regulations, rather than consistently producing collusive output to maximize joint profits; and (ii) Delegation does not necessarily increase the overall number of cartels, but it may change how cartels are formed.

Suggested Citation

  • Kim, Jeong Yeol, 2025. "Delegation and strategic collusion under antitrust policies: An experiment," China Economic Review, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:chieco:v:90:y:2025:i:c:s1043951x25000197
    DOI: 10.1016/j.chieco.2025.102361
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    Keywords

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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