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

Arbeitspapier

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 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 1926

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 ; judgment of communication ; corporate leniency program ; price competition ; 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): 2021

Further information

• Handle: http://hdl.handle.net/10419/229899
• Last update: 10.03.2025, 11:44 AM CET