The leniency rule revisited: Experiments on cartel formation with open communication

B-Tier
Journal: International Journal of Industrial Organization
Year: 2021
Volume: 76
Issue: C

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel, sanctioning only the latter. To this aim, we introduce a participant in the role of the competition authority, who is properly incentivized to judge the communication content and price setting behavior of the firms. Using this novel design, we revisit the question whether a leniency rule successfully destabilizes cartels. In contrast to existing experimental studies, we find that a leniency rule does not affect cartelization. We discuss potential explanations for this contrasting result.

Technical Details

RePEc Handle
repec:eee:indorg:v:76:y:2021:i:c:s0167718721000217
Journal Field
Industrial Organization
Author Count
3
Added to Database
2026-01-24