Collusion among many firms: The disciplinary power of targeted punishment

Catherine Roux and Christian Thöni

Journal of Economic Behavior & Organization, 2015, vol. 116, issue C, 83-93

Abstract: We explore targeted punishment as an explanation for collusion among many firms. We run a series of Cournot oligopoly experiments with and without the possibility of targeting punishment at specific market participants. In markets with two, four, six, and eight firms, we analyze to what extent targeted punishment helps firms to restrict output. We find that targeted punishment leads to more collusion across all markets. Furthermore, beyond two firms, this collusive effect turns out to be even stronger in markets with more competitors, suggesting a reversal of the conventional wisdom that collusion is easier with fewer firms.

Keywords: Cournot oligopoly; Experiments; Collusion; Targeted punishment (search for similar items in EconPapers)
JEL-codes: C91 K21 L13 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (14)

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Working Paper: Collusion Among Many Firms: The Disciplinary Power of Targeted Punishment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:116:y:2015:i:c:p:83-93

DOI: 10.1016/j.jebo.2015.03.018

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