Actions Speak Louder than Words: Econometric Evidence to Target Tacit Collusion in Oligopolistic Markets

Patrick Andreoli-Versbach () and Jens-Uwe Franck

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: Tacit collusion reduces welfare comparably to explicit collusion but remains mostly unaddressed by antitrust enforcement which greatly depends on evidence of explicit communication. We propose to target specific elements of firms’ behavior that facilitate tacit collusion by providing quantitative evidence that links these actions to an anticompetitive market outcome. We apply our approach to incidents on the Italian gasoline market where the market leader unilaterally announced its commitment to a policy of sticky pricing and large price changes which facilitated price alignment and coordination of price changes. Antitrust policy has to distinguish such active promotion of a collusive strategy from passive (best response) alignment. Our results imply the necessity of stronger legal instruments which target unilateral conduct that aims at bringing about collusion.

Keywords: antitrust law; tacit collusion; oligopolistic competition; gasoline market (search for similar items in EconPapers)
JEL-codes: K21 K42 L13 L41 L71 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-bec, nep-com, nep-hme and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://epub.ub.uni-muenchen.de/16179/1/AndreoliVersbach_Franck_2013.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:16179

Access Statistics for this paper

More papers in Discussion Papers in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg ().