Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103736
Authors: 
Normann, Hans-Theo
Rösch, Jürgen
Schultz, Luis Manuel
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 74 [rev.]
Abstract: 
We explore whether lawful cooperation in buyer groups facilitates collusion in the product market. Buyer groups purchase inputs more economically. In a repeated game, abandoning the buyer group altogether or excluding single firms constitute credible threats. Hence, in theory, buyer groups facilitate collusion. We run several experimental treatments using three-firm Cournot markets to test these predictions and other effects like how buyer groups affect outcomes when group members can communicate. The experimental results show that buyer groups lead to lower outputs when groups can exclude single firms. Communication is often abused for explicit agreements and this strongly reduces competition.
Subjects: 
buyer groups
cartels
collusion
communication
experiments
repeated games
JEL: 
C7
C9
L4
L41
ISBN: 
978-3-86304-073-4
Document Type: 
Working Paper

Files in This Item:
File
Size
739.28 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.