An Experimental Analysis of the Complications in Colluding when Firms are Asymmetric

Charles Mason

No 7047, CESifo Working Paper Series from CESifo

Abstract: I study an indefinitely repeated game where firms differ in size. Attempts to form cartels in such an environment, for example by rationing outputs in a manner linked to firm size differences, have generally struggled. Any successful cartel has to set production shares in a manner that ensures no firm will defect. But this can require allocating sellers disproportionate shares, which in turn makes these tacit agreements difficult to create and enforce. I analyze some experimental evidence in support of this last proposition.

Keywords: asymmetric cartel; repeated game; experiments (search for similar items in EconPapers)
JEL-codes: D80 L15 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-bec, nep-com, nep-exp, nep-gth, nep-ind and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7047

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