Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 1999:11: Does Collusion without Communication Exist?

Astri Muren () and Roger Pyddoke
Additional contact information
Astri Muren: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Roger Pyddoke: Swedish Institute for Transportation and Communications Analysis

Abstract: Tacit cartels did not arise in experimental triopoly markets even with the help of detailed instructions to prospective cartel members on how to coordinate actions. In duopoly markets tacit cartels were successful, with winning bids and supporting "pass" bids increasing gradually. A simulated third bidder, entering whit known probability, prevented the buildup of cartel prices in duopoly markets. We suggest that support for each other. In markets with more than two sellers the inability to communicate appears to prevent the creation of mutual trust.

Keywords: Tacit collusion; laboratory experiment

JEL-codes: C91; L41

15 pages, July 14, 1999

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