Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies
Ola Andersson and
Erik Wengström ()
Scandinavian Journal of Economics, 2007, vol. 109, issue 2, 321-339
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. Copyright The editors of the "Scandinavian Journal of Economics" 2007 .
References: View complete reference list from CitEc
Citations: View citations in EconPapers (37) Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9442.2007.00500.x link to full text (text/html)
Access to full text is restricted to subscribers.
Working Paper: Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:scandj:v:109:y:2007:i:2:p:321-339
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0347-0520
Access Statistics for this article
Scandinavian Journal of Economics is currently edited by Richard Friberg, Matti Liski and Kjetil Storesletten
More articles in Scandinavian Journal of Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().