39 Pages Posted: 17 May 2006
Date Written: May 2006
A cartel is socially not desirable. But is it a normative problem? And has merger control reason to be concerned about tacit collusion? Neither is evident once one has seen that the members of a cartel face a problem of strategic interaction. It is routinely analysed in terms of game theory. Much less frequently, however, an obvious parallel is drawn. For cartel members, the formation of the cartel and cartel discipline are a public good. Making the parallel explicit is elucidating both at the theoretical and at the experimental levels. The paper contrasts oligopoly theory with public goods theory, and oligopoly experiments with public goods experiments.
Keywords: Oligopoly, Public Good, Experiment
JEL Classification: C72, D21, D43, H41, K21, L13, L41
Suggested Citation: Suggested Citation
Engel, Christoph, Competition as a Socially Desirable Dilemma (May 2006). MPI Collective Goods Preprint No. 12. Available at SSRN: https://ssrn.com/abstract=902813 or http://dx.doi.org/10.2139/ssrn.902813