Delegation and strategic collusion under antitrust policies: An experiment

Jeong Yeol Kim

China Economic Review, 2025, vol. 90, issue C

Abstract: When firm owners delegate decision-making to managers, such as corporate executives who operate firms directly, a firm's behavior can vary depending on how the owner determines the incentives of the managers. This study employs a lab experiment to investigate the impact of delegation on collusive behavior of firms in a situation where antitrust policies exist. The experiment highlights the following two key findings: (i) Firms form cartels strategically, alternating their collusive and competitive output to evade antitrust regulations, rather than consistently producing collusive output to maximize joint profits; and (ii) Delegation does not necessarily increase the overall number of cartels, but it may change how cartels are formed.

Keywords: Delegation; Collusion; Cartel; Antitrust (search for similar items in EconPapers)
JEL-codes: C9 K21 L2 L4 L44 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:90:y:2025:i:c:s1043951x25000197

DOI: 10.1016/j.chieco.2025.102361

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