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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.

Publiceringsår

2007

Språk

Engelska

Sidor

321-339

Publikation/Tidskrift/Serie

Scandinavian Journal of Economics

Volym

109

Issue

2

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