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Working Paper 15-1v2
Post-Cartel Tacit Collusion: Determinants, Consequences, and Prevention
AUTHORS: Subhasish M. Chowdhury & Carsten J. Crede
ABSTRACT: We experimentally investigate the attributes and effects of post-cartel tacit collusion (PCTC) as well as policy measures aimed at its prevention. PCTC occurs irrespective of the absence or presence of an antitrust authority and in different competition regimes. PCTC is determined both by collusive price hysteresis and learning about cartel partners’ characteristics and strategies. As a result, it is strongly related with the preceding cartel success. The estimation of cartel overcharges, an important factor in litigation, is found out to be biased downwards in the presence of PCTC. As a policy note, we show that debarment of managers involved in cartels from the market can prevent PCTC.
KEYWORDS: Tacit collusion; antitrust; cartels; price hysteresis; experiment
CITATION: Chowdhury, S.M. & Crede, C.J. (2015) "Post-Cartel Tacit Collusion: Determinants, Consequences, and Prevention", CCP Working Paper 15-1 v2
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