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...

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...

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,...

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,...

Industry-wide voluntary agreements are touted as a means for corporations to take more corporate social responsibility (CSR). We study what type of joint CSR agreement induces firms to increase CSR efforts in a model of oligopolistic competition with differentiated products. Consumers have a...

This paper analyzes the inner workings of cartels. To understand how sanctioning institutions prevent cartel formation we study their effect on firms' communication in a laboratory experiment. Using machine learning to organize the chat communication into topics, we find that firms are less...

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...

Numerous studies investigate which sanctioning institutions prevent cartel formation but little is known as to how these sanctions work. We contribute to understanding the inner workings of cartels by studying experimentally the effect of sanctioning institutions on firms’ communication. Using...

Many cartels are formed by individual managers of different firms, but not by firms as collectives. However, most of the literature in industrial economics neglects individuals' incentives to form cartels. Although oligopoly experiments reveal important insights on individuals acting as firms,...

We analyze the effects of better algorithmic demand forecasting on collusive profits. We show that the comparative statics crucially depend on the whether actions are observable. Thus, the optimal antitrust policy needs to take into account the institutional settings of the industry in question....

Many cartels are formed by individual managers of different firms, but not by firms as collectives. However, most of the literature in industrial economics neglects individuals' incentives to form cartels. Although oligopoly experiments reveal important insights on individuals acting as firms,...

We analyze the effects of better algorithmic demand forecasting on collusive profits. We show that the comparative statics crucially depend on the whether actions are observable. Thus, the optimal antitrust policy needs to take into account the institutional settings of the industry in question....

Traditional economic theory of collusion assumed that cartels are inherently unstable, and yet some manage to operate for years or even decades. While the literature has presented several determinants of cartel stability, the vast majority focuses on firms as entities, even though cartels are...

We examine recent claims that a particular Q-learning algorithm used by competitors 'autonomously' and systematically learns to collude, resulting in supracompetitive prices and extra profits for the firms sustained by collusive equilibria. A detailed analysis of the inner workings of this...

Traditional economic theory of collusion assumed that cartels are inherently unstable, and yet some manage to operate for years or even decades. While the literature has presented several determinants of cartel stability, the vast majority focuses on firms as entities, even though cartels are...

How does imperfect law enforcement affect drug trafficking, predation on firms, informality, and aggregate production? To quantify it, a general equilibrium occupational model is developed in which there is room for drug trafficking, crime against businesses, and tax evasion in the presence of...

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...

We study an infinitely repeated oligopoly game in which firms compete on quantity and one of them is capacity constrained. We show that collusion sustainability is non-monotonic in the size of the capacity constrained firm, which has little incentive to deviate from a cartel. We also present...

This paper studies cartels in public infrastructure procurement and analyzes the conditions under which they succeed in generating rents. It first conceptualizes the interplay of the central actors of a procurement project, notably the contractor, the procurement agency, as well as the...

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...

Entry represents a fundamental threat to cartels engaged in price fixing. We study the extent and effect of this behavior in the largest price fixing case in US history, which involves generic drugmakers. To do so, we link information on the cartel’s internal operations to regulatory filings...

The article proposes a new method of attributing liability and calculating fines for cartel infringements. It borrows from the cooperative game theory – the field, which is rarely considered in legal scholarship. The central idea is to use Shapley value for calculating cartel fines. Shapley...

The widespread use of market-making algorithms in electronic over-the-counter markets may give rise to unexpected effects resulting from the autonomous learning dynamics of these algorithms. In particular the possibility of `tacit collusion' among market makers has increasingly received...

The Supreme Court will soon decide an unusual price-fixing case: In re Vitamin C Antitrust Litigation. It is unusual because the defendants – Chinese manufacturers – do not deny they fixed prices; because China claims it ordered them to do so, but this is a controversial fact; because the...

We examine how executive compensation can be designed to motivate product market collusion. We look at the 2013 decision to close several regional offices of the Department of Justice, which lowered antitrust enforcement for firms located near these closed offices. We argue that this made...

We investigate how well firms can collude with partial communication in comparison to full communication. We find that firms vary their communication strategies with different network structures. In the network with either isolated firms or full communication, more players send "pure promises”...

We study the interest rate’s effect on the stability of cartels. A low interest rate implies a high discount factor and thus increases cartel stability. If firms access the capital market, an additional effect comes into play: a low interest rate lowers investment costs, resulting in more...

We study the implications of delegating bids to a bidding agency for the revenues and efficiency of the Generalized Second-Price auction, the standard sales mechanism for allocating online ad space. The agency maximizes both its own profits and the advertisers' surplus and implements collusive...

We examine the effects of passive forward ownership on the sustainability of upstream collusion. We consider a homogeneous Cournot duopoly with competing vertical chains. In one vertical chain, the upstream firm has passive ownership over its downstream client. We find that passive forward...

Tacit and dissimulated participation in illicit activity tackles situations when a natural or legal person takes a part in the illicit activity but does not expressly declare its will to take part in such an activity or expresses will that is contrary to actual intent or behaviour. Or the person...

This study investigates the impact of cheap talk on price in a repeated Bertrand oligopoly experiment. Participants are placed in three-person bidding groups where the lowest bid wins. During the first 10 rounds, participants are not allowed to communicate with each other. All three-person...

Starting from a theoretical model of coalition formation, we analyse which price markers are more adequate to identify clues of a partial cartel. Based on the theoretical model, we argue that measures of the shape of a distribution (such as kurtosis and skewness) are more adequate to partial...

This paper examines the effect of firms' lobbying activities on penalties received from public competition authorities. For an average sanctioned firm, our model indicates that one additional dollar in lobbying yields to a decrease in cartel sanction of 3.12 dollars. We also observe that cartel...

Notwithstanding vigorous regulatory action against cartels in Australia and abroad, and the proliferation of antitrust class actions in North America, cartel class actions in Australia have been rare. The cartel class actions brought in Australia to date have faced significant challenges. These...

Concentration-based screens for horizontal mergers, such as those employed in the US DOJ and FTC Horizontal Merger Guidelines, play a central role in merger analysis. However, the basis for these screens, in both form and level, remains unclear. We show that there is both a theoretical and an...

Recent studies have proven that pricing algorithms can autonomously learn to coordinate prices, and set them at supra-competitive levels. The growing use of such algorithms mandates the creation of solutions that limit the negative welfare effects of algorithmic coordination. Unfortunately, to...