How communication makes the difference between a cartel and tacit collusion: A machine learning approach

Arbeitspapier

This paper sheds new light on the role of communication for cartel formation. Using machine learning to evaluate free-form chat communication among firms in a laboratory experiment, we identify typical communication patterns for both explicit cartel formation and indirect attempts to collude tacitly. We document that firms are less likely to communicate explicitly about price fixing and more likely to use indirect messages when sanctioning institutions are present. This effect of sanctions on communication reinforces the direct cartel-deterring effect of sanctions as collusion is more difficult to reach and sustain without an explicit agreement. Indirect messages have no, or even a negative, effect on prices.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 2000

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Group Behavior ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Monopolization; Horizontal Anticompetitive Practices
• Subject: cartel ; collusion ; communication ; machine learning ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Andres, Maximilian ; Bruttel, Lisa Verena ; Friedrichsen, Jana
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/251797
• Last update: 10.03.2025, 11:44 AM CET