Communicating Cartel Intentions

Lisa Bruttel and Maximilian Andres ()
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Maximilian Andres: University of Potsdam, Berlin School of Economics, CEPA

No 77, CEPA Discussion Papers from Center for Economic Policy Analysis

Abstract: While the economic harm of cartels is caused by their price-increasing effect, sanctioning by courts rather targets at the underlying process of firms reaching a price-fixing agreement. This paper provides experimental evidence on the question whether such sanctioning meets the economic target, i.e., whether evidence of a collusive meeting of the firms and of the content of their communication reliably predicts subsequent prices. We find that already the mere mutual agreement to meet predicts a strong increase in prices. Conversely, express distancing from communication completely nullifies its otherwise price-increasing effect. Using machine learning, we show that communication only increases prices if it is very explicit about how the cartel plans to behave.

Keywords: cartel; collusion; communication; machine learning; experiment (search for similar items in EconPapers)
JEL-codes: C92 D43 L44 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-big, nep-com, nep-exp, nep-ind and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:77

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