Partial Cartels and Ringleaders: An Experimental Study

Lisa Bruttel (), Holger A. Rau () and Vasilisa Werner ()
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Lisa Bruttel: University Potsdam, CEPA
Holger A. Rau: University Duisburg-Essen, University Göttingen
Vasilisa Werner: University Potsdam

No 92, CEPA Discussion Papers from Center for Economic Policy Analysis

Abstract: This paper investigates partial cartels, which laboratory studies have neglected despite their empirical prevalence. We conduct two laboratory experiments to understand how they function compared to all-inclusive cartels and respond to antitrust policies. First, we compare partial cartel formation with all-inclusive settings typically studied experimentally. Second, we test how ringleader discrimination policies perform within partial cartel environments. Our first study reveals that partial cartels create opposing effects: while individual willingness to communicate decreases due to free-riding incentives, communication occurs more frequently overall and prices are higher when sufficient firms participate. We find that all-inclusive cartels prove essential for achieving high prices. Our second study discovers that ringleader discrimination policies can backfire by facilitating cartel formation through leading-by-example effects. These findings highlight distinct coordination mechanisms of partial cartels and demonstrate the need for careful antitrust policy design.

Keywords: (partial) cartel; collusion; communication; experiment; ringleader discrimination (search for similar items in EconPapers)
JEL-codes: C92 D43 L41 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-com, nep-exp and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:92

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