Firm-Specific Information and Explicit Collusion in Experimental Oligopolies
Tinbergen Institute Discussion Paper 15-054/I
27 Pages Posted: 13 May 2015
Date Written: May 10, 2015
We experimentally study the effect of information about competitors’ actions on cartel stability and firms’ incentives to form cartels in Cournot markets. As in previous experiments, markets become very competitive when individualized information is available and participants cannot communicate. In contrast, when communication is possible, results reverse: Markets become less competitive and cartels become more stable when individualized information is available. We also observe that the extra profits that firms obtain thanks to the possibility to communicate are higher when individualized information is present, suggesting that firms have greater incentives to form cartels in that situation.
Keywords: Cournot oligopoly; Cartels; Information; Experiments
JEL Classification: C92, L13, L41
Suggested Citation: Suggested Citation