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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)

Abstract: 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)
Date: 2013
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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