Rebels without a clue? Experimental evidence on partial cartels
Georg Clemens and
Holger Rau ()
No 69, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
This paper provides experimental evidence on the formation of partial cartels with endogenous coordination. Firms face a coordination challenge when a partial cartel is to be formed as every firm is better off if it is not inside the cartel but is a free-riding outsider. We introduce a three-stage mechanism with communication which facilitates the formation of a cartel and respectively allows the formation of a partial cartel. All-inclusive cartels are always formed. We find that partial cartels are frequently rejected out-of-equillibrium if moutside firms profit excessively from the formation of the cartel.
Keywords: Partial Cartels; Coordination; Communication; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D02 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:69
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