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Title:Do buyer groups facilitate collusion? PDF Logo
Authors:Normann, Hans-Theo
Rösch, Jürgen
Schultz, Luis Manuel
Issue Date:2012
Series/Report no.:DICE Discussion Paper 74
Abstract:We explore whether buyer groups, in which firms legally purchase inputs jointly, facilitate collusion in the product market. In a repeated game, abandoning the buyer group altogether or excluding single firms from them constitute more severe credible threats, hence, in theory buyer groups facilitate collusion. We run several experimental treatments in a three-firm Cournot framework to test these predictions, and we also explore the impact communication has on buyer groups. The experimental results show that buyer groups lead to lower outputs when groups can exclude single firms. Communication is identified as a main factor causing collusive product markets.
Subjects:buyer groups
cartels
collusion
communication
experiments
repeated games
JEL:C7
C9
L4
L41
ISBN:978-3-86304-073-4
Document Type:Working Paper
Appears in Collections:DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)

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