Do antitrust laws facilitate collusion? Experimental evidence on costly communication in duopolies
Författare
Summary, in English
Bertrand supergames with non- binding communication are used to study price formation and stability of collusive agreements on experimental duopoly markets. The experimental design consists of three treatments with different costs of communication: zero- cost, low- cost and high- cost. Prices are found to be significantly higher when communication is costly. Moreover, costly communication decreases the number of messages, but more importantly, it enhances the stability of collusive agreements. McCutcheon ( 1997) presents an interesting application to antitrust policy by letting the cost of communication symbolize the presence of an antitrust law that prohibits firms from discussing prices. Although our experimental results do not support the mechanism of McCutcheon's ( 1997) argument, the findings point in the direction of her prediction that antitrust laws might work in the interest of firms.
Avdelning/ar
Publiceringsår
2007
Språk
Engelska
Sidor
321-339
Publikation/Tidskrift/Serie
Scandinavian Journal of Economics
Volym
109
Issue
2
Länkar
Dokumenttyp
Artikel i tidskrift
Förlag
Wiley-Blackwell
Ämne
- Economics
Nyckelord
- renegotiation-proof equilibria
- weakly
- costly communication
- collusion
- antitrust policy
- experiments
Status
Published
ISBN/ISSN/Övrigt
- ISSN: 1467-9442