The effect of a leniency rule on cartel formation and stability: Experiments with open communication

Arbeitspapier

Cartels can severely harm social welfare. Competition authorities introduced leniency rules to destabilize existing cartels and hinder the formation of new ones. Empirically, it is difficult to judge the success of these measures because functioning cartels are unobservable. Existing experimental studies confirm that a leniency rule indeed reduces cartelization. We extend these studies by having a participant in the role of the competition authority actively participating in the experiment. Based on chat communication content and price setting behavior, this authority judges whether firms formed a cartel and decides on fines in real time. We find that a leniency rule does not affect cartelization in this setup.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1835

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: cartels ; corporate leniency programs ; Bertrand competition ; experiments

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): 2019

Further information

• Handle: http://hdl.handle.net/10419/209642
• Last update: 10.03.2025, 11:44 AM CET