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Communication and Market Sharing: An Experiment on the Exchange of Soft and Hard Information

Andreas Freitag (), Catherine Roux and Christian Thöni ()
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Andreas Freitag: University of Basel

Working papers from Faculty of Business and Economics - University of Basel

Abstract: We study the role of communication in collusive market sharing. In a series of Cournot oligopoly experiments with multiple markets and repeated interaction, we vary the types of information that firms can exchange. We distinguish between hard information-verifiable information about past conduct-and soft information- unbinding information about future conduct. We find that the effect of communication on the firms' ability to collude depends on the type of information available: market prices increase only slightly when hard information allows perfect monitoring of rivals' past actions, but the price raise due to soft information, however, is substantial. The explicit consent of each cartel member to a common collusive strategy, even if stated only once, drives this strong effect. Our results point to the types and contents of communication that should be of particular concern to antitrust authorities.

Keywords: Collusion; market sharing; cournot oligopoly; information; Cmmunication, experiments (search for similar items in EconPapers)
JEL-codes: C91 L13 L41 (search for similar items in EconPapers)
Date: 2019-11-29
New Economics Papers: this item is included in nep-com, nep-exp, nep-gth, nep-ind and nep-ore
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Journal Article: COMMUNICATION AND MARKET SHARING: AN EXPERIMENT ON THE EXCHANGE OF SOFT AND HARD INFORMATION (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2019/23

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