Post-Cartel Tacit Collusion: Determinants, Consequences, and Prevention
Code:
15-01
Authors:
Chowdhury, S & Crede, C
Date:
01 Jan 2015
Abstract
Post-Cartel Tacit Collusion: Determinants, Consequences, and Prevention
By Chowdhury, S & Crede, C
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.
