Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/181967
Authors: 
Odenkirchen, Johannes
Year of Publication: 
2018
Series/Report no.: 
DICE Discussion Paper 299
Abstract: 
We analyze the pricing behavior of firms when explicit partial cartels have formed in experimental markets through communication. Using a repeated, asymmetric capacity constraint price game, we show that, in line with theory, a partial cartel is sufficient to increase market prices for all firms. Moreover, we find that prices of cartel insiders and outsiders are not necessarily on the same level what contradicts common theoretical predictions. This is because communication allows cartel members to overcome a potential coordination problem and enables an equilibrium in (joint) mixed strategies to emerge. The results therefore underline the importance of communication in explicit cartels and the resulting market outcomes.
Subjects: 
partial cartels
explicit collusion
umbrella effects
experiments
JEL: 
C92
D03
L13
L41
ISBN: 
978-3-86304-298-1
Document Type: 
Working Paper

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