Abstract

http://ssrn.com/abstract=2030331
 
 

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Rebels Without a Clue? Experimental Evidence on Partial Cartels


Georg Clemens


Heinrich Heine Universität Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Holger Andreas Rau


University Erlangen-Nuremberg

April 05, 2013


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-equilibrium if outside firms profit excessively from the formation of the cartel.

Number of Pages in PDF File: 32

Keywords: Partial Cartels, Coordination, Communication, Experiment

JEL Classification: C92, D2, L41

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Date posted: March 29, 2012 ; Last revised: April 8, 2013

Suggested Citation

Clemens, Georg and Rau, Holger Andreas, Rebels Without a Clue? Experimental Evidence on Partial Cartels (April 05, 2013). Available at SSRN: http://ssrn.com/abstract=2030331 or http://dx.doi.org/10.2139/ssrn.2030331

Contact Information

Georg Clemens
Heinrich Heine Universität Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )
Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
Holger Andreas Rau (Contact Author)
University Erlangen-Nuremberg ( email )
Lange Gasse 20
Nuremberg, 90403
Germany
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